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E-Commerce And Digital Marketing Regulations

February 27, 2024

E-commerce, or transacting marketing and sales online, is the lifeblood of many US businesses. Forbes estimates worldwide online retail sales will be about $6.9 trillion this year. To put that in perspective, that’s about ten times the revenues Walmart generated last year through its online presence and about 10,500 stores worldwide.

E-Commerce Laws Near And Far

Federal, state, and international laws govern E-commerce. These laws may involve complex tax, contractual, privacy, and security issues. Because technology changes quickly, laws governing it may be new and developing or quickly outdated. Below, our friends at Focus Law LA discuss these changes.

1. Contracts

E-commerce involves selling services and goods through the Internet. Thanks to technology, the parties are not physically together and may not speak to each other. This creates questions about whether contracts are made and, if so, how they can be enforced. Contract law is based on state laws, so how a situation will be resolved may depend on the applicable jurisdiction. If the customer is in another country, their rules may apply.

2. E-SIGN Act

The Electronic Signatures In Global and National Commerce Act (E-SIGN Act) creates a uniform national standard for all electronic transactions. It encourages using electronic signatures, contracts, and records. Legally enforceable contracts may be made when a party agrees to its terms through an electronic signature, which could be a sound (such as pressing a telephone number) or a keyboard symbol. It also has requirements for consumer consent, retention requirements for electronic records and contracts, and mandates that some notices be sent on paper.

3. Data Privacy And Protection 

Your business may collect users’ personal information, including names, telephone numbers, credit card information, birthdates, Social Security numbers, email, and physical addresses. Your host server may also record information about each website visit, which may identify users. State and federal laws may protect online privacy in particular situations.

Consumers suing businesses due to privacy violations have successfully used common law (laws developed over time by judges and appellate courts) claims, including fraud, breach of contract, and unjust enrichment. State statutes covering particular data (like medical information) as well as deceptive or unfair trade practices may be used against you. The Federal Trade Commission (FTC) has sued businesses that don’t comply with privacy policies on their websites for deceptive advertising. 

4. Consumer Notice Laws 

Several states, including California, have laws requiring companies to inform consumers about their personal data collection and other issues. 

5. Digital Marketing 

The federal CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing) regulates a company’s use of marketing emails. The FTC enforces procedural and content requirements. The law establishes fines of $250 per email that violate the law’s requirements, up to $2 million. There may also be special damages for willfully or knowingly violating the law. If emails are used for fraud, violators may face criminal penalties of up to five years in prison. 

Potentially untruthful or fraudulent online marketing or advertising communications could also be investigated and prosecuted by a state’s attorney general or be the subject of a lawsuit in state court, just as if they were delivered over the phone, in mailings, or via newspaper or radio advertising. If you believe you have a case, meeting with a business litigation lawyer is a wise first step.