Legal Obligations of Online Entrepreneurs/retailers in a Virtual World

Electronic/internet commerce ( commonly called e-commerce) refers to the sale of goods or services using the internet, and the consequent transfer of money and data to execute these transactions. E-commerce platforms can therefore be likened to a marketplace, but online.

Over the last few years, there has been some growth in e-commerce and the number of online shopping platforms. With the advent of COVID-19, and the attendant restrictions on physical interactions there has been a further shift towards e-commerce.

Additionally, with a lot of brick and mortar institutions closed or having their employees working remotely due to the coronavirus pandemic, many businesses with limited or no previous ecommerce presence are changing their businesses’ trajectories. This is because of the significant increase in consumer bulk buying online with statistics showing that e-commerce accounts for more than three quarter of retail growth in 2020.

Even as the lockdown eases out, it is projected that e-commerce is likely to continue in its increasing growth pattern as consumers are adapting to online shopping and may be unlikely to risk physical exposure where alternative purchase methods are made available.

TYPES OF E-COMMERCE MODELS

Although different types of e-commerce models may exist, there are four main types that describe almost every transaction that takes place. They are as follows:

a. Business to Business (B2B): when a business sells goods or services to another business (e.g. where a company sells its white label technology to another business).

b. Business to Consumer (B2C): when a business sells goods or services to an individual consumer (e.g. where a consumer buys his products from Amazon or Jumia).

c.

Consumer to Business (C2B):

when a consumer sells their own products or services to an organisation or a business. An example of this is where a social media influencer offers exposure to her online audience in exchange for a fee from the business.

d. Consumer to Consumer (C2C): when a consumer sells a good or service to another consumer (e.g. when a consumer sells his old furniture on ebay to another consumer).

LEGAL MATTERS ARSING

The increase in online commercial activities has also brought its own challenges and there is a need for business owners to critically consider the customer purchase processes which may not be as simple as they appear.

For entrepreneurs running e-commerce startups, legal infractions come in many forms, with each infraction presenting a different challenge for the business. It is therefore pertinent that owners of these platforms engage a knowledgeable lawyer and familiarise themselves with a few legal obligations that usually arise in e-commerce transactions.

Here are a few things to note when determining if an e-commerce platform is compliant with established laws and legal principles.

Data protection and privacy

This is arguably one of the most important issues that entrepreneurs running e-commerce platforms should take into consideration, particularly in the light of the provisions of the General Data Protection Regulation (GDPR) and the Nigerian Data Protection Regulation (NDPR).

Most e-commerce platforms are reservoirs of sensitive customer information, which is often collected via contact forms, customer registration and during the checkout process.

As consumers share their information with businesses online, they expect such information to be kept confidential. By leaking valuable information of a customer, the business can lose its image and reputation and be subject to a lawsuit.

In order to ensure that the platform is compliant with the data protection laws, there must be a comprehensive data protection policy that takes the following into consideration:

a. Cookies policy:

E-commerce platforms typically use cookies or similar technologies in running their businesses. A cookie is information that a business owner places on its platform so that it can remember details about its visitors when they visit subsequently. It can also be used to track the consumer’s shopping activities and habits.

With this sort of tracking activities and use of data, there should be a cookie policy in place in line with the GDPR and NDPR.

b. Privacy policy

E-commerce platforms typically collate and process personal data from their customers and visitors to their platforms. It is therefore imperative that owners of these platforms ensure that they have a comprehensive privacy policy that is NDPR compliant.

The policy should also be clearly visible on the platform and provide visitors with the option of determining whether they want their information disclosed to other parties.

c. Electronic Marketing without consent

After receiving the data of visitors to their platforms, businesses usually target these visitors by sending marketing communications and emails without the consent of the prospective customer.

These actions can breach data privacy rules and legal advice should be sought before embarking on such marketing activities.

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