Leadership

Digital Commerce Regulatory Requirements Are Much More Than PCI Compliance

January 17, 2019
For consumers, shopping can be as simple as a click and a swipe. But for retailers, the challenges of selling to customers across state lines and internationally can be formidable. There are also complex tax compliance issues, product regulations, data protection, and shipping considerations.
 
Non-Compliant Sites (Is Yours At Risk?)
 
To complicate matters, plaintiffs are explicitly targeting non-compliant websites in the hopes of generating large settlements. They are taking advantage of several recent rulings, which have created fear, uncertainty, and headaches for many online merchants. 
 
In 2018, more than 1,000 lawsuits were filed against sites accused of failing to comply with the Americans Disabilities Act (ADA). One immediate problem, of course, is that many of the ADA’s requirements are vague, interpretive, and far from obvious. As a result, “Everybody is kind of caught unaware and these plaintiffs’ lawyers are taking advantage,” explains Minh Vu of the law firm Seyfarth Shaw.
 
The EU’s General Data Protection Regulations (GDPR) present a similar conundrum for companies. Some US sites have scrambled to get their sites GDPR-ready, but others have failed to take the regulations seriously or have taken to blocking international traffic altogether.
 
In fact, non-compliance with GDPR is likely to invite an aggressive response from plaintiffs and regulatory authorities. We’ve seen a situation where a single GDPR complaint has caused companies to spend inordinate hours and resources manually removing consumer data.
 
Managing Shipping, Local Regulations, and Tax Collection
 
Equal access and data protection are just the beginning. Online merchants have to navigate an increasingly complex thicket of tax compliance requirements. In the past, digital players enjoyed plenty of loopholes and advantages meant to nurture e-commerce. But all of this is changing dramatically. Municipalities are looking for revenue, laws are being updated, and new rulings are being handed down, which means that the costs of tax compliance will only increase.
 
Thankfully, there are automated solutions on the market that can help you manage your tax liabilities in multiple jurisdictions. The point is that you have to develop a culture that’s proactive about getting ahead of the regulatory issues you are likely to face. This is necessary to avoid being blindsided by expensive tax bills as municipalities and local governments aggressively go after online businesses.
 
Shipping is another area you have to stay on top of. Typically, the costs of getting your products into the hands of customers can be 7 to 10 percent of your operations. In all probability, you are competing against Amazon Prime, which means you have to take advantage of every efficiency at your disposal.  
 
Logistical software can help you:
 
  • Negotiate better rates;
  • Coordinate multi-carrier deliveries; and
  • Provide transparency throughout the delivery process. 
     
In addition, some products you ship may belong to highly regulated industries (wine, firearms, or hunting equipment). The laws governing these items can be incredibly complex. But once again, software can help you monitor and manage both shipping costs and regulatory compliance.
 
Takeaway
 
If you expect to sell internationally, there will be more challenges than you expect. You will require expertise that’s familiar with the localized costs of doing business. These can include tax collection and compliance requirements, exchange rate considerations, credit card validation and payment processing issues, and knowledge of regulations that pertain to the products you sell in specific countries, states, or municipalities. 
 
You can’t just turn your site on and start shipping. You need to be ready operationally to handle each of these factors at the local levels where you expect to ship. The costs of making sure you are compliant can be substantial, but they will considerably higher if you are not compliant.