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Operating an E-Commerce Store? What you should know to reduce your Risks

Business Insurance Cyber Insurance Liability Insurance Technology Sector Insurance IT Services Insurance E-commerce Insurance

Australia has seen a rapid increase in ecommerce stores over the past few years, more so since the beginning of the COVID-19 pandemic. This means that there are many ecommerce owners who might be completely unaware of their responsibilities as an online business owner, leaving themselves exposed to a range of business, financial and legal risks.

Although you’re selling products online, you still have the same, if not more responsibilities as regular brick-and-mortar stores located on the city strips. Let’s take a look at some of these responsibilities so you can be informed about the risks, to then be able to put the right measures in place to meet your legal obligations and reduce your exposures.

Australian Consumer Law

The Australian consumer law (find important free resources and guides here) designed to protect consumers, whether they buy in-store or online. This applies whether you’re a wholesaler, retailer, importer or distributor. This means that you not only have a responsibility to sell products that are safe to the public, but to also match the description you have advertised on your ecommerce store. While promotional hype is ok, stepping over the line to put misleading or deceptive content on your site may lead to investigations, as well as potential fines and other penalties. The products must also be of acceptable quality; under the laws, if any of the listed consumer guarantees are not met, the consumer has an automatic right to a refund, replacement or repair.

If any products are deemed unsafe, you can face not only a refund, but also legal action and substantial damages, even if it’s the fault of the overseas manufacturer. This could force you out of business. A good idea is to buy IT (Information technology) Liability insurance. This provides cover for legal expenses and any damages you have to pay for breaches of the Australian Consumer Law, Contractual Liability, breach of intellectual property right (IP), faulty advice and product liability.

Australian Privacy Law

The Australian Privacy Laws are the cornerstone for protecting people’s privacy. This details the use, access and retention of personal information, especially sensitive personal information. The new Consumer Data Right (CDR) law also provides consumers with more control over how their personal information is managed in banks and how banks must share that information, if requested by the customer.

Management Liability Insurance

Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

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Business Insurance

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

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Business Package

Purchase up to six products under one Business Insurance Package.

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There are daily news reports of Denial of Service (DoS), phishing, malware, hacking and data theft. Given that your ecommerce store collects a significant amount of personal information from your customers, such as names, addresses, phone numbers and credit card details, IT security is vital. This means that as an ecommerce store owner, it’s vital both for your business to operate and also ensure the safety and security of your customer’s personal information. Cyber or IT Liability insurance provides cover for legal expenses and any damages you have to pay for breaches of the Australian Privacy Law, as well as any loss of income.

Australian Spam Laws & Regulations

As an ecommerce store, you likely collect your customer’s emails. You might also ask them to subscribe to your mailing list. Under Australia’s Spam Laws, there’s a big difference between sending unsolicited emails to these addresses and sending them to customers who have given their consent.

This is usually achieved by asking them to subscribe to your mailing list, but even so, you still need to identify your ecommerce store. You must also provide customers with an easy way to contact your store and unsubscribe and be removed from your marketing list. Sending emails to customers who have not subscribed can be considered as spam and you can be fined for breaching the Act. This includes sending information via SMS, MMS and instant messaging.

To ensure that your ecommerce store has the right insurances in place to help you’re your business and reduce your risks, talk to Risk Guidance Insurance today.

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General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Risk Guidance Insurance, AFSL 288320

This article originally appeared on Risk Guidance Insurance News and has been published here with permission.