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Updated Feb 14, 2024

5 Legal Challenges for E-Commerce Businesses

These five legal challenges can make or break an e-commerce business. Here's how to ensure you are prepared when it comes to starting your e-commerce business.

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Sean Peek, Senior Analyst & Expert on Business Ownership
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E-commerce is a relatively new area of business and, as such, laws and regulations are changing all the time. It is vital that you are aware of any potential legal issues your business could face, as well as any government regulations you need to follow. While it is always important to cover potential legal ramifications with a lawyer, there are a few things you should always be aware of when pursuing legal compliance as an e-commerce business.

What are the e-commerce directive regulations?

Companies that do business in EU member nations must ensure they comply with the e-Commerce Directive. Its purpose is to streamline the rules across the EU nations while also defining how businesses should conduct online transactions. The regulation dictates what information companies should provide to customers when they make an online transaction with the retailer. The directive establishes rules regarding transparency and information requirements, commercial communications, electronic contracts, and limitation of liability. The directive’s rules also cover online marketing and unsolicited commercial communications.

For example, retailers must outline clear terms and conditions, disclose the price and tax/shipping costs, and include details about any trade or professional group the seller is a member of.

One of the key principles behind the directive is the internal market clause, which ensures e-commerce businesses have to follow the law only of the EU member state in which they are established and not the laws of any state where their services are accessible. The directive also strives to prevent unfair discrimination against those who use e-commerce businesses online within the EU and covers these services: online information services, online selling of products/services, online advertising and entertainment services. 

The main framework behind the directive is to build trust and transparency for customers who are making purchases online. It also aims to remove any obstacles for online businesses that operate across EU member state borders.  Any company that operates in an EU nation should know about the latest interpretations of the directive and any additional impacts from doing business in specific EU member states. The European Commission continues to revise the rules to adapt the regulations for changing commerce needs. Most recently, the European Commission proposed the Digital Services Act to address new online challenges, particularly those relating to intermediaries. 

While the regulations are written to present strict guidelines, another goal is to expand e-commerce throughout the common market. Staying atop of commission guidance is essential for best practices on the continent.  

author image
Sean Peek, Senior Analyst & Expert on Business Ownership
Sean Peek co-founded and self-funded a small business that's grown to include more than a dozen dedicated team members. Over the years, he's become adept at navigating the intricacies of bootstrapping a new business, overseeing day-to-day operations, utilizing process automation to increase efficiencies and cut costs, and leading a small workforce. This journey has afforded him a profound understanding of the B2B landscape and the critical challenges business owners face as they start and grow their enterprises today. In addition to running his own business, Peek shares his firsthand experiences and vast knowledge to support fellow entrepreneurs, offering guidance on everything from business software to marketing strategies to HR management. In fact, his expertise has been featured in Entrepreneur, Inc. and Forbes and with the U.S. Chamber of Commerce.
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