Want to build e-commerce site! Any advice on legal/regulations aspects?

Sunday_Ironfoot

I want to build a fully fledged e-commerce web application for allowing other people to sell products online, and was wondering if anyone had any recommendations for books, websites or any advice on general that cover the legal/regulations aspects of running an e-commerce business? I've seen some books on Amazon but hardly any of them have any reviews, so I don't know which ones to go for. I don't really know anything about law so something not aimed at a lawyer, but a complete beginner. Does anyone here own/run an e-commerce business and could give some advice?

Hey if this thing takes off it might become a great source of WTFs :)

Many thanks!

asuffield

Yes. Hire a lawyer.

MarcB

Any idiot can slap together a shopping cart system with some credit card processing at the end. The actual shopping system is pretty trivial, and therefore that's the easy part.

If you want to built a system that's generally portable and usable in any jurisdiction, you'll have to also hook into various shipping APIs (UPS, FedEx, USPS, DHL, etc..), you'll need some way to process sales taxes. Then there's the whole Customer Service angle. Accounting, administration. auditing, etc...

In other words, unless you're willing to spend one HELL of a lot of time researching all this, and keeping it up to date (politicians love changing taxes with one liner amendments in totally non-tax-related bills, ya know), I'd say DON'T even TRY. There's plenty of systems already built that do all this stuff, some of them are even free-as-in-beer (GPL licensed and the like). It's far easier for some Mom&Pop operation to set up their dinky site using Yahoo or Google Checkout.

Sunday_Ironfoot

@asuffield said:

Yes. Hire a lawyer.

OK, I'll just pull a couple of £1000 from my arse. If I had money to hire a lawyer I wouldn't be posted here.

Eventually I will hire lawyer, but right now I'm just after a general overview of e-commerce law and then build my business model around that. I want to know what the legal stuff and regulations are before I build functionality and implement design decisions into the system that I find later can't be support because I've tripped up over some legal issues. For instance, do I normalise the databse to allow customers to use multiple addresses to send goods to, or must goods be sent to the customers credit card address only, all I know is that some buisnesses allow this while others insist they can only send goods to your card address, so I'm obviously interested in what the legal issues around this are. This will initially be for UK businesses only.

asuffield

@Sunday Ironfoot said:

@asuffield said:
Yes. Hire a lawyer.
OK, I'll just pull a couple of £1000 from my arse. If I had money to hire a lawyer I wouldn't be posted here.

Substitute "real software developer" for "lawyer", same problem. Lawyering is actually worse - software development is naturally hard, while the legal industry has been deliberately made hard in order to prevent people from being able to do anything without hiring a lawyer.

If you cannot afford to hire a lawyer, you cannot afford to be in business.

KenW

@Sunday Ironfoot said:

@asuffield said:
Yes. Hire a lawyer.
OK, I'll just pull a couple of £1000 from my arse. If I had money to hire a lawyer I wouldn't be posted here.

As painful for me as it is, I have to agree with moderated (asuffield) here. You need a lawyer.

@Sunday Ironfoot said:

Eventually I will hire lawyer, but right now I'm just after a general overview of e-commerce law and then build my business model around that. I want to know what the legal stuff and regulations are before I build functionality and implement design decisions into the system that I find later can't be support because I've tripped up over some legal issues. For instance, do I normalise the databse to allow customers to use multiple addresses to send goods to, or must goods be sent to the customers credit card address only, all I know is that some buisnesses allow this while others insist they can only send goods to your card address, so I'm obviously interested in what the legal issues around this are. This will initially be for UK businesses only.

Several problems. First, there's nothing in e-commerce law AFAIK that says you can either ship to only the credit card billing address or ship to more than one address. That's a business decision. Companies who ship only to the credit card billing address probably decide to do so because they've been taken in by fraudulent purchases before (by someone using lost or stolen credit card information), and have decided to try and protect themselves by shipping only to the cardholder's address.

Secondly, any applicable e-commerce regulations or laws would be highly dependent on the location of your business. Country, state or province (even the county or city in the US) can make things totally different for you as compared to someone else. You really need to consult someone who is familiar with those regulations and laws in your specific locality, instead of asking a bunch of people you don't even know in an online forum.

PJH

@KenW said:

@Sunday Ironfoot said:

This will initially be for UK businesses only.
Secondly, any applicable e-commerce regulations or laws would be highly dependent on the location of your business.

Mildly relevant information - if the location of your business is in the EU, then the actual location of the business will be of little to no relevance from 2015-2019, it will be the location of the customer that matters, and I suspect not solely for online-only businesses.

TRWTF™: http://www.earthtimes.org/articles/show/153129.html

Talks on
updating VAT rules had been deadlocked over a proposal to make users of
electronic media such as TV and internet-telephone services pay VAT on
the service in their home country, rather than in the country in which
the service originated.

No doubt this will be extended to other products.

MarcB

@Sunday Ironfoot said:

.... all I know is that some buisnesses allow this while others insist they can only send goods to your card address, so I'm obviously interested in what the legal issues around this are.

Those kinds of restrictions come from both the business itself and their CC processor. Mostly it depends on how paranoid about CC fraud they are. Not shipping to anywhere but the CC's billing address is one way to stop a stolen CC being used from sending a $5000 stereo to Nigeria. Sometimes the restrictions are imposed by the CC processor due to previous fraudulent charges and/or too many chargebacks from disputed charges.

Personally, I've dealt with Authorize.net as a CC processor, and you can configure your account to be as liberal or paranoid as you want. At its most liberal settings, you literally have to submit only the CC number, name on the card, expiration date, and amount to charge. As you dial up the security, you have to start submitting billing address, CVV number, line-item charges, etc... If anything's missing or doesn't sync up with your account's configuration, Auth.net will refuse the transaction.

Here's more stuff to consider on just how complex things get. What about discounts? coupons? special sales? loyalty points? Just discounts alone can get overwhelming. Will it be a flat percentage? Fixed dollar amount? Both? If it's both, which one gets applied first? ($100 - 10% - $10 can come out quit differently depending on how they want them applied). Discounts on only certain parts of the orders? Discounts apply only to a limited quantity (10% off first 10 left handed hydrospanners?). But 2 get 1 free? Graduated discounts? 10% off first 100, 15% off next 100?

If things get this complicated on the coding side of things, the legal side will be be worse... that involves lawyers. *fear*

Helix

@Sunday Ironfoot said:

@asuffield said:
Yes. Hire a lawyer.
OK, I'll just pull a couple of £1000 from my arse. If I had money to hire a lawyer I wouldn't be posted here.
Eventually I will hire lawyer, but right now I'm just after a general overview of e-commerce law and then build my business model around that. I want to know what the legal stuff and regulations are before I build functionality and implement design decisions into the system that I find later can't be support because I've tripped up over some legal issues. For instance, do I normalise the databse to allow customers to use multiple addresses to send goods to, or must goods be sent to the customers credit card address only, all I know is that some buisnesses allow this while others insist they can only send goods to your card address, so I'm obviously interested in what the legal issues around this are. This will initially be for UK businesses only.

TRWTF is:

If you think you need a lawyer (or even need to read up up e-commerce law) to build a web shop you are doomed already

If you get a lawyer to help you build a webshop you are also doomed.

@KenW said:

As painful for me as it is, I have to agree with moderated (asuffield) here. You need a lawyer.

Please don't use people's real names unless they generally sign their posts with it, or they have said that it is OK to call them by that name. If he wanted people referring to him by his name, he would put it in his signature or made his username include it. This is pretty basic online courtesy in a community like this.

moderator's note: I agree with tster, real name of asuffield censored

Grovesy

Not to put you of the idea Ironfoot, if you want to run this as either a packaged product (or base product that can be customized) or even a service, you are looking at a very competitive area. (Retail works by buying for as little as you can and sell as high as you can, paraphrased: screwing your suppliers and screw your customers)<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>

You will be on the supplier end of this.. After working on many an ecommerce / integration project for large retailers, its tough.<o:p></o:p>

There are many hosted platforms out there which run everything for small to large (very very larg) retailers, e.g. front end, payment processing, product listings, search, merchandising, delivery, stock, integration with back end systems such as SAP etc.<o:p></o:p>

Products that simply list products, throw a few merchandising banners up and take orders / process payments are two a penny. The ones that do it well, do things such as guided search and navigation (with language support for everything from French, to Mandarin), targeted merchandising on demographics, with features such as 'also brought' and 'best sellers' etc... These products are used by everyone from Virgin Megastores, to Tesco's, B&Q, and even smaller retailers such as www.ctshirts.co.uk (a good example of a system built on top of an ecommerce engine).<o:p></o:p>

Basically, there are allot of very good products that retailers pay on by scale (licensed by number of processors), that have been around for many years, very well tuned and are affordable by small retailers and large alike. <o:p></o:p>

So unless you have the next big idea (the last was guided search and nav, allowing for that drill down style navigation).... I really wouldn't waste your time (I've worked for a start-up that tried it, and even with a couple of £m investment still failed.)<o:p></o:p>

Sunday_Ironfoot

@Grovesy said:

Not to put you of the idea Ironfoot, if you want to run this as either a packaged product (or base product that can be customized) or even a service, you are looking at a very competitive area. (Retail works by buying for as little as you can and sell as high as you can, paraphrased: screwing your suppliers and screw your customers)<o:p></o:p>

You will be on the supplier end of this.. After working on many an ecommerce / integration project for large retailers, its tough.<o:p></o:p>

There are many hosted platforms out there which run everything for small to large (very very larg) retailers, e.g. front end, payment processing, product listings, search, merchandising, delivery, stock, integration with back end systems such as SAP etc.<o:p></o:p>

Products that simply list products, throw a few merchandising banners up and take orders / process payments are two a penny. The ones that do it well, do things such as guided search and navigation (with language support for everything from French, to Mandarin), targeted merchandising on demographics, with features such as 'also brought' and 'best sellers' etc... These products are used by everyone from Virgin Megastores, to Tesco's, B&Q, and even smaller retailers such as www.ctshirts.co.uk (a good example of a system built on top of an ecommerce engine).<o:p></o:p>

Basically, there are allot of very good products that retailers pay on by scale (licensed by number of processors), that have been around for many years, very well tuned and are affordable by small retailers and large alike. <o:p></o:p>

So unless you have the next big idea (the last was guided search and nav, allowing for that drill down style navigation).... I really wouldn't waste your time (I've worked for a start-up that tried it, and even with a couple of £m investment still failed.)<o:p></o:p>

Yes, this is basically what I'm trying to do but a little differently. I want to target small businesses (including individual soul traders) who want to set up their own online business. It would be a completely open system, you wouldn't have to prove you're a business or require permission to set up a shop, I would protect end customers from fraudelent e-shops by holding onto payment for one month allowing time for customers to complain so I can deal with it, refund them, hold on to it longer until problems get sorted etc. The system would also be free to use as in no monthly fee or initial setup fee, I would simply charge a small percentage or each transaction (say 3% or 4%). So if a shop sells something for £100, they would get £97 one month later. The businesses themselves wouldn't require any in depth technical knowledge or be required to hire anyone, it would simply be following a bunch of wizards on a website to get a e-commerce shop setup, then upload product details etc. all hosting, payment systems, domain registration, or anything complicated like that will be taken care of.

So, yes, I know this sort of thing has been done to death before, I just want to try it a little differently that's all, make it more accessible and open. Think of ebay shops, but more advanced.

I'm not expecting to make mega bucks from this, just hopefully enough to live on so I could quite my job to work on it full time and build it further from there.

stratos

@Sunday Ironfoot said:

@Grovesy said:
Not to put you of the idea Ironfoot, if you want to run this as either a packaged product (or base product that can be customized) or even a service, you are looking at a very competitive area. (Retail works by buying for as little as you can and sell as high as you can, paraphrased: screwing your suppliers and screw your customers)<o:p></o:p>

You will be on the supplier end of this.. After working on many an ecommerce / integration project for large retailers, its tough.<o:p></o:p>

There are many hosted platforms out there which run everything for small to large (very very larg) retailers, e.g. front end, payment processing, product listings, search, merchandising, delivery, stock, integration with back end systems such as SAP etc.<o:p></o:p>

Products that simply list products, throw a few merchandising banners up and take orders / process payments are two a penny. The ones that do it well, do things such as guided search and navigation (with language support for everything from French, to Mandarin), targeted merchandising on demographics, with features such as 'also brought' and 'best sellers' etc... These products are used by everyone from Virgin Megastores, to Tesco's, B&Q, and even smaller retailers such as www.ctshirts.co.uk (a good example of a system built on top of an ecommerce engine).<o:p></o:p>

Basically, there are allot of very good products that retailers pay on by scale (licensed by number of processors), that have been around for many years, very well tuned and are affordable by small retailers and large alike. <o:p></o:p>

So unless you have the next big idea (the last was guided search and nav, allowing for that drill down style navigation).... I really wouldn't waste your time (I've worked for a start-up that tried it, and even with a couple of £m investment still failed.)<o:p></o:p>

Yes, this is basically what I'm trying to do but a little differently. I want to target small businesses (including individual soul traders) who want to set up their own online business. It would be a completely open system, you wouldn't have to prove you're a business or require permission to set up a shop, I would protect end customers from fraudelent e-shops by holding onto payment for one month allowing time for customers to complain so I can deal with it, refund them, hold on to it longer until problems get sorted etc. The system would also be free to use as in no monthly fee or initial setup fee, I would simply charge a small percentage or each transaction (say 3% or 4%). So if a shop sells something for £100, they would get £97 one month later. The businesses themselves wouldn't require any in depth technical knowledge or be required to hire anyone, it would simply be following a bunch of wizards on a website to get a e-commerce shop setup, then upload product details etc. all hosting, payment systems, domain registration, or anything complicated like that will be taken care of.
So, yes, I know this sort of thing has been done to death before, I just want to try it a little differently that's all, make it more accessible and open. Think of ebay shops, but more advanced.
I'm not expecting to make mega bucks from this, just hopefully enough to live on so I could quite my job to work on it full time and build it further from there.

Holding on to the payment is going to be a potential problem. This means the webshop owner needs to be able to bridge one month of payments from his own pocket. Depending on the type of business this could simply be too expensive.

asuffield

@Sunday Ironfoot said:

(including individual soul traders)

For trading in souls, I recommend J. W. Wells & Co.

MarcB

@Sunday Ironfoot said:

I would protect end customers from fraudelent e-shops by holding onto payment for one month allowing time for customers to complain so I can deal with it, refund them, hold on to it longer until problems get sorted etc. The system would also be free to use as in no monthly fee or initial setup fee, I would simply charge a small percentage or each transaction (say 3% or 4%). So if a shop sells something for £100, they would get £97 one month later.

So you'd be the one hosting this app and people would pay you a monthly fee to host their store on your server(s)? Even for small business this has been done, Yahoo for one has a pretty comprehensive small business store solution, including full hosting and payment/billing. You'd have to offer something very compelling to bring in clients. Just saying "we'll host your inventory details and product images" ain't going to cut it.

As for the fees, 3-4% isn't much, but is that on top of the CC charges? Every time you use a CC at a store, Visa/MC/Amex are getting a percentage of the charge, plus a flat per-transaction fee. It can be as high as 3-4% depending on how good the CC processor feels about you and the potential number of chargebacks you'll incur. If you're charging on top of those background costs, then you're basically saying a customer is going to lose 6-8% (MINIMUM) per transaction just in fees. They'd better have a pretty high markup to afford that kind of loss.

If it's completely free/open, then will you be packaging up the source and letting people host it themselves? In that case, why use your new/untested system, when stuff like OSCommerce already exist?

Honestly, it looks like you've skipped past the entire "is there a need for this" stage and skipped straight to the mundane details of "should I normalize or not". Go talk to some businesses in your target audience. Sound them out. Find out what they want from an e-commerce solution. And more important, find out if they would even want to buy into any system, let alone yours. You're not Microsoft, you can't slap together some fancy eye-candy over a pile of bugs and stuff it onto store shelves and still sell millions of units. If you don't get it right the first time, you most likely won't have the resources to try again with v2.0, let alone the v3.0 that does get it right.

In other words, don't quit your day job.

milmin

Joel on software has a large discussion about this, Failing that, try google.