(Newswire.net — May 2, 2016) — From the early days of eBay and Craigslist to specialty sites today, the Internet has become the center of the resale world … but that doesn’t mean it’s a free for all. Online sellers have to comply with a number of rules, particularly if they handle high-profile brands.
Admittedly, some flout the rules and manage to get away with it, but ignoring regulations can risk legal troubles and even get your business shut down. Rather than jeopardize your resale business, you’d be wise to study up on the rules that govern this unusual marketplace.
Below are five compliance issues that ecommerce merchants should be aware of.
1. The Issue Of Warranties
It’s in the nature of many resellers ecommerce that they don’t run as traditional, legitimate businesses. Instead, they tend to use loopholes and less-than-fully-legal practices to obtain and sell their wares.
Buyers take on some part of the risk when they opt to purchase products from an unlicensed seller, but if you’re selling, you should be up-front about what you’re advertising. Unlicensed products, for example, are sold without the protection of otherwise applicable warranties.
Take KitchenAid stand mixers as an example. These are typically sold with a one-year limited warranty, but that warranty is nullified as soon as the mixer is resold because the seller is technically the first consumer: He or she cannot transfer the warranty.
If buyers believe your business is a legitimate point of sale, however, they may be misled about this protection.
2. Trademark Disputes
In the same vein as the warranty issue, if you are selling KitchenAid mixers using the branded logo but you aren’t a licensed seller, you may find yourself in hot water legally due to trademark infringement. That branding is owned by the home company and they can sue you for using it without permission — even if you really are selling their products and not counterfeits.
If you are a licensed reseller, however, you should advertise that clearly on your site and make sure you have the paperwork to back it up, because this makes you more desirable to do business with. By properly registering with companies whose products you resell, you’ll enjoy other benefits, such as additional products for sale, payment management, and even bonus payments.
This more than makes up for having to juggle sales tax and other above-board responsibilities.
3. Fraudulent Payment
Anyone who’s been reselling products for any length of time can tell you that while most customers are reliable, you will inevitably encounter fraudulent transactions in the ecommerce industry. That’s why it’s important to outline the terms of all transactions clearly and work with a well-known payment processing company. These outfits are better prepared to protect you from scams.
Fraud protection is another bonus you’ll likely receive by working as a licensed reseller rather than dealing under the table, and that can save you significantly on chargebacks and other financial traps.
4. Jurisdictional Claims
In the U.S., interstate commerce is overseen by the federal government, which is far from an ideal setup for ecommerce resellers. Restricting jurisdiction to a single state is typically less expensive and more likely to protect you from customer lawsuits: No one wants to travel to sue the company that sold them a blender.
If you want to maintain jurisdiction on your sales, include in your sales contracts the proviso that your state retains jurisdiction over all exchanges. You can also make this a check box for concluding any sale.
Buyers have a harder time claiming they didn’t read the terms for a check box than when the terms are buried in the transaction agreement.
5. Shipping Problems
Shipping your products securely is an essential part of an ecommerce business. Customers won’t work with you if you have a habit of poorly packaging products or delaying delivery.
Invest in appropriate packing materials and insure your packages. When shipping issues crop up, be responsive; customers understand that ecommerce may involve occasional delivery hiccups, but when your customer service is top-notch they are more likely to return and do business again.
If you’re a vigilant online reseller, your business can grow rapidly. Design an easily navigable and rapidly scalable site that can grow with you. You may not be the next Amazon, but reliable resellers are not that common, and with determination you can make the mark in your own product niche.