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What To Know About Ecommerce Compliance

The increased popularity of online shopping has made it easy for businesses to thrive without a physical store. However, it has also witnessed an increase in fraudulent online transactions. This is because a big percentage of the global consumer base prefers to shop from e-commerce stores. While this saves them on time, it also opens them up to cyber attackers who seek to use financial information to complete fraudulent transactions.

E-commerce stores seek to bring buyers and sellers together, but it’s also their duty to protect their users from cyber attacks. This is why online stores have to prioritize e-commerce compliance as it seeks to protect customer data during credit card transactions. 


What is E-commerce Compliance?

E-commerce transactions need to be straightforward, which why e-commerce stores have to adhere to certain compliance requirements. These include:


1. Data Protection

The rate of online fraud is on the rise, and thus online shoppers are mindful of where they shop. Customers want to know that their personal information is secure, and you can guarantee that by being compliant with the local data laws. 

For example, if your e-commerce stores will sell products to citizens of EU countries, you’re required to adhere to the recently implemented General Data Protection Regulation. These regulations seek to protect consumer information by putting more emphasis on things like Social Security numbers, names, addresses, IP addresses, and cookie data.

In the US, you are required to be PCI compliant since your store is handling credit card data during transactions. If you opt to run your business as a non-compliant store, you risk facing hefty fines and data breaches. While you can easily recover from a fine, it’s harder to recover after a data breach. Customers will lose trust in your store, and or even worse, your business is stripped of the right to accept any payment via credit cards.

PCI compliance is hectic, but you need it, which is why you need to understand what it entails, the requirements, and how to achieve compliance. 


2. Shipping and delivery

Ordering products online that are later delivered to customer’s location often means e-commerce stores have control over the delivery time. However, as an e-commerce shop, you need a well-defined delivery policy. Let your customers know how long it will take before the products are dispatched and the expected delivery timeline.

Make it easy for them to understand how ordering more items or items above a certain price will affect the shipping cost. This will prevent issues such as disgruntled customers due to late delivery or high shipping fees.


3. Refund policy

It’s impossible to avoid refunds when dealing with e-commerce. There is always something wrong with the products, either they are the wrong size, color, or they don’t function.  You need a refund policy that caters to all these issues. If you choose not to accept refunds, make it clear to your customers.

If you’ll accept refunds, ensure that the customers understand the conditions that warrant a refund. Also, be clear on which party caters for the cost of returns.


4. Licenses

Since e-commerce stores typically start with no physical office, you would think that they don’t need permits and licenses to operate. Unfortunately, they do as they’re treated like any other business hoping to make profits.

Typically, an e-commerce store will need licenses such as:

  • Business Operation License- you need a license to operate a business in your respective city or county. Every county has its own business operation license, and the requirements may vary. Check with your local City Hall, how much you’re required to pay, any additional requirements and the frequency of renewal
  • Sales tax registration- Your state expects to gain tax from your business, which means you’ll need a tax permit when setting up your store. You might want to check the tax laws of the entire country since some states will require you to collect sales tax even without a physical location in the state. These states will calculate the tax required based on transactions in the state, revenue earned, or any other basis they choose. 
  • Home Occupation Permit- e-commerce business starts small, and many owners choose their homes as their preferred offices. This tends to exempt the owners from dealing with typical permits and licenses that businesses deal with. However, it doesn’t exempt them from all licenses and permits since they’ll need a Home Occupation Permit. The permit ensures that your business is not threatening the peaceful coexistence of your neighborhood by adding unnecessary traffic and noise.

Other licenses include a Seller’s Permit, Doing Business As License, Occupational License, etc.


Wrapping up

E-commerce stores are like any other business and will have to meet certain requirements before they’re allowed to operate. Some of these requirements seek to protect the interests of you as the sellers, but the rest protect the consumers and ensure that remit taxes to the relevant authorities.



Author’s Bio:

Jordan MacAvoy is the Vice President of Marketing at Reciprocity Labs and manages the company’s go-to-market strategy and execution. Prior to joining Reciprocity, Mr. MacAvoy served in executive roles at Fundbox, a Forbes Next Billion Dollar Company, and Intuit, via their acquisition of the SaaS marketing and communications solution, Demandforce.

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