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Selling Online: Be On The Right Side Of The Law With Your Ecommerce Start-Up

With ecommerce in South Africa growing at an exceptional pace, and the expected triple figure percentage surge of mobile spend predicted for 2018, it is more important than ever to ensure your online terms are in order.

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E-commerce is at an all-time high across the globe. Selling products online is no longer only reserved for large retailers. With a variety of ecommerce platforms available, it’s never been easier for start-ups and small businesses to enter this competitive sector.

That said, many entrepreneurs are unaware of how important it is to have the necessary terms and conditions visible throughout their online store.

With ecommerce in South Africa growing at an exceptional pace, and the expected triple figure percentage surge of mobile spend predicted for 2018, it is more important than ever to ensure your online terms are in order.

What are online terms and conditions?

Online terms and conditions set out your agreement with your customers and users. They can range from simple, standard terms for ‘browse only’ websites, to complex e-commerce arrangements regulating the relationship between the buyers and sellers.

Online terms should essentially set out the rules that you and your users will follow and the terms when a purchase or transaction is being made. It should limit your liability if your product or service fails, explain each parties’ rights and cover what to do if any conflict arises.

Related: 5 Ecommerce Myths That Are Sabotaging People’s Businesses

The terms which should not be neglected are browser terms, privacy terms and commercial/ transactional terms. Each one of these deal with specific aspects of your app or website’s use. It includes, for example, limitation of liability, intellectual property rights, the collection of personal information, payment methods, dispute resolution and each parties’ rights.

Here’s a quick guide to each of these and why they are important:

Browser terms:

Browser terms apply to anyone “surfing” your website before you have a customer relationship with them, i.e. before the “browser” decides to make a purchase. It protects your business by setting out rules for the use of the website and making it clear that you have no responsibilities to the user.

The most important things to cover:

  • users to acknowledge that you don’t owe them any responsibilities
  • users are to respect your website and intellectual property
  • users don’t yet have any rights to any of your services or products
  • you own all intellectual property
  • website content is copyright protected and that the user only has a right to view it on your website.

In summary, the browser terms set out the “dos” and “don’ts” in relation to using your website and exist to limit your potential liability to users.

Related: 5 Basics To Success When Starting An Ecommerce Business

Commercial/ transactional terms:

Commercial or transactional terms are by far the most important terms to have in place. It serves as the contract between you and the user, once they become a customer, i.e. make an online purchase or an order for services through your app or website. It is the binding contract upon which your start-up earns revenue from selling products or delivering services.

Revenue is the lifeblood of a business, so you should give careful attention to the commercial terms to ensure that the essential features, including those that are unique to your product or service, are commercially accurate.

The important aspects that these terms should include are:

  • a general explanation of the service or product being offered through the app or website
  • payment methods, fees and any associated costs i.e. delivery fees
  • user/ customer account or profile requirements
  • duration and renewal terms
  • the applicability of promotional codes and vouchers
  • any unique sale terms that would apply to the products or services
  • the terms applicable to returns
  • limitation of liability provisions
  • any warranties made by the parties
  • any other disclosures that are required to be made in terms of the Electronic Communications and Transactions Act 25 of 2002.

Privacy terms:

The goal of privacy terms is to create your right to collect and use certain information about the users for specific purposes.

Personal information is often collected through cookies as well as when browsers become commercial or transactional users of your website or app. Users do so by creating an account or by integrating their social media accounts with the website or app. You need to explain the rights of the users regarding the information being collected, how it will be stored and the purposes for which it will be used.

The Protection of Personal Information Act 4 of 2013 (“POPI”) sets conditions for the lawful processing of personal information and privacy terms assist you to comply with the legal requirements.

Privacy terms usually include the following important aspects:

  • the use of cookies to collect certain information
  • the purposes for the processing of the personal information
  • the sharing of personal information by the website owner with certain select third parties
  • the storage of personal information, including the security measures taken and whether cross-border storage will occur and
  • the user’s rights in relation to his/ her personal information and the recourse that he/ she has.

Related: 4 Methods For Building A Successful Ecommerce Brand

In closing, online terms are there to protect you and your business. Although it doesn’t mean you won’t ever be sued, it will ensure that you are prepared and protected against unlimited damages. Furthermore, make it your priority to be proactive and mitigate any claims that may arise against you.

So, if you don’t have online terms on your website or app, make sure you are compliant and put them online as a matter of urgency. If they are in place, review them regularly and make sure you’re covered on all fronts.

Dommisse Attorneys Inc. - a fully specialised corporate finance and commercial law firm, with a strong focus on providing start-ups with the legal support they need to achieve their business aspiration and vision. Jack O'Reilly is a commercial law associate at Dommisse Attorneys and forms part of the Start-up law team.

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