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Rules and Regulations Concerning E-Commerce in the U.S.

Before you begin selling products online, it is important that you are aware of the plethora of rules and regulations impacting e-commerce in the U.S. Laws currently govern e-commerce issues like the protection of consumers’ privacy, online advertising and marketing, copyright, contract requirements, terms and conditions and the collection of sales tax online. Violating one of the many e-commerce rules could subject your business to civil penalties or even criminal sanctions. Here is a brief overview of the e-commerce laws that you need to know in the U.S.

Consumer Privacy

Because businesses often handle sensitive consumer information to facilitate a transaction, such as credit card or social security numbers, it is vital that businesses have strong protections in place for this information. The Federal Trade Commission (FTC) is responsible for the enforcement of privacy matters. Businesses have a responsibility to take steps to protect this data. These steps may entail investing in software that encrypts and stores consumer data. All e-commerce business owners should ensure that a privacy policy is posted in a public area on the e-commerce website. The privacy policy should provide consumers with an overview of how their data is collected, used and viewed.

E-commerce business owners should be familiar with PCI compliance and its role in storing and processing credit card data. The Payment Card Industry (PCI) Data Security Standard (DSS) is an important standard that sets the measures that must be taken to ensure consumer financial data security.

Collection of Taxes

Online businesses are subject to tax laws. If a business maintains a physical presence in a state, then it must collect state and local sales tax from customers. Businesses that do not maintain a physical presence in a state will not have to impose a state or local sales tax on individuals. Certain states do not have a sales tax, so e-commerce business owner may want consider operating out of these states. States without a sales tax are Hawaii, Delaware, Alaska, New Hampshire, Oregon and Montana. Also, some states provide tax exemptions for certain types of items. Business owners may want to familiarize themselves with tax exemptions to see whether any apply to the products that they sell.
Truthful Advertising Online

E-commerce business owners are required to abide by fair business and advertising practices. If a website makes any misleading or unfair claims about a product, then consumers may have a claim for fraudulent misrepresentation. A business may also be in violation of warranty provisions within the UCC if it makes certain false statements or omissions. Business owners can avoid issues with misrepresentation claims by providing clear and detailed information about the use of a product or service.

Online Contract Principles

Merchants need to be aware of contract principles when they attempt to sell products online to consumers. Merchants may want to stipulate in their terms and conditions that a customer’s credit card may be debited prior to the formation of a contract. Business owners should make sure that they provide an order form that is filled out by consumers. The order form should have a “submit” button that makes it clear that a customer understands the terms and conditions of the contract. When a customer validates his or her credit card information for an order, online merchants are required to provide an acknowledgement page for customers. Customers must acknowledge that they have read the confirmation page and that all of the information is accurate.

Right to Cancel a Contract

Under the Distance Selling Regulations, consumers have a minimum of seven business days to cancel a contract. For contracts that entail the sale of services, merchants may advise that consumers are unable to cancel a contract after the performance of services has begun. If consumers were able to cancel a contract after receiving the benefit of a seller’s services, this would be a form of unjust enrichment and would not be upheld in a court of law.


Because there are now many rules and regulations governing e-commerce practices, business owners may want to consider meeting with a business attorney to set up an e-commerce website. E-commerce business attorneys are aware of all of the regulations that can impact one’s online company.


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