When e-commerce really started taking off for many businesses, especially after payment tools became easy to install, use, and apply to websites, many companies thought the new sales channel was a solution for removing a lot of unnecessary costs and liabilities. Retail storefronts and counter personnel started to look obsolete, and companies could easily streamline via digital presence to produce the same or more in sales online. Additionally, profit margins increased due to removing storefront expenses like facility leases and rent, sales personnel, utilities, store insurance and more. However, e-commerce also opened up another door that wasn’t expected, and that came in the form of new or more frequent legal costs.
Business Form Drawbacks
Many companies learned the hard way that their business form got in the way of protection when it came to chasing after fraud. Technically, a company needs to be incorporated to have a legal presence online. That isn’t necessarily the case for many sole proprietors, partnerships, and similar. So, when fraud occurred through their website, these companies found their cases being denied or not prosecuted due to not having a recognized legal entity as a business. Worse, the business itself became exposed when people sued for misrepresentation online, with business owners and managers becoming personally liable right away, again due to the lack of legal entity presence of the business via incorporation.
Trademark Headaches
The speed at which businesses need to launch a presence online can be counted in days and hours, especially when trying to catch the wave of viral demand. Unfortunately, the legal world still only gives protection to those who file their trademark and copyright applications correctly. The result is that substitutes and competitors can steal images and brands without punishment if a logo, brand, or image is not trademarked properly. The cost can be immense in redirecting market traffic at the expense of the company that started the launch. Similarly, just assuming automatic copyright protection is enough is asking for problems; the best copyright protection is that which is filed proactively with the federal government.
Transaction Legalities and Privacy
Companies online have an obligation to protect their customers, particularly in terms of their data. Failure to do so can result in hefty penalties, as well as paying for their credit protection after a breach or data loss.
Delivery and Shipping Injuries
With a heavy reliance on couriers, warehousing, and moving large loads, the frequency of injuries for workers involved has gone up exponentially. Warehouse workers can fall or be injured by tooling or loads, couriers can be harmed by animals or vehicles, products can be damaged resulting in replacement costs, and shrinkage becomes a costlier problem with whole shipments disappearing. Without sufficient insurance and legal help in Colorado, a single mistake or injury can wipe out a small business.
Companies need to really think through all their e-commerce risk now before launching or expanding into the digital space. If not, there may not be room for recovery after a big mistake. This is why advanced legal help is so critical before engaging online.
