Tuesday, March 6, 2007/
Selling goods and services over the internet means going into unfamiliar legal jurisdictions. Don’t be alarmed, but do be alert.
Trading in a world without borders
There are traps for young players in selling goods and services over the internet.
Whether you have an eBay merchant store, a B2B portal or just a plain old website, you are trading in the jurisdiction where the customer is purchasing and receiving your goods and services.
This is an unavoidable fact, even where your standard terms and conditions select local law as the governing law.
The good news is that many companies comply without incident every day.
In the US there is an old legal concept called interstate commerce – anything and any business behavior that moves across the borders of states in the US is considered a part of interstate commerce, including all telecommunication transactions: phone calls, emails, online purchasing using the internet, etc.
All transactions that move in interstate commerce within the US are federally regulated; anything delivered by post, by telephone or over the internet happens in a federal domain.
To put it simply, you cannot contract out of US federal law – US federal privacy law, consumer protection, trade regulations and consumer data management (to name a few) apply irrespective of what your terms and conditions on your website say about local law applying.
The US is not unique in this regard; the EU and UK take a similar view.
So what should you do?
You could simply go on to sites such as Microsoft, Yahoo, Google, IBM, Nike and any other mega company and simply study what they do (privacy policies, terms of service, etc) and follow their lead.
Alternatively, you could consult a lawyer to get your standard documents right for the jurisdictions in which you trade goods and services.
Why should you care? If you don’t think this is a serious matter, I have one word for you: extradition. It’s becoming quite popular in relation to breaches of US federal law by “offshore” companies and their directors.
E-commerce is not going anywhere any time soon. You might as well join the fun!