The fashion e-commerce sector has grown exponentially in recent years following its boom at the height of the COVID-19 pandemic and a constant rise in the revenue generated. Accordingly, e-commerce is an essential tool in the fashion industry and with the excitement of launching a successful e-commerce platform comes the responsibility of navigating its complex legal landscape.
In this post, we will break down the essential legal considerations for fashion e-commerce business owners to be aware of before starting their online business. From business registration to data protection, we’ve got you covered.
Business Structure and Registration
First things first! Before launching an online store make sure your business is properly registered with the appropriate organization or commission of the country where sales will take place because it is essential to establish a solid business foundation. With that being said, there are various business structures in Nigeria, including a registered business name, company limited by shares, company limited by guarantee, unlimited company (companies maybe private or public) and an incorporated trustee. For an online business, the most suitable business structures are either a registered business name or a company limited by shares, however the choice is primarily decided on by the founders of the business depending on the advantages and disadvantages.
Website Domain Name
Most online fashion businesses have a domain name similar to their brand name, therefore it is important to choose a domain name that does not conflict with any existing names, in order to protect yourself against infringement risks such as the owner of the trademark authorizing you to take the site down.
Accordingly, where conflicts concerning domain names arise, such disputes are dealt with under the Uniform Domain Name Dispute Resolution Policy (UDPR). To invoke this policy, a trademark holder should either file a complaint in a court of proper jurisdiction against the domain name holder or in cases of abusive registration submit a complaint to an approved dispute resolution service provider. Additionally, under Section 25 of the Cybercrime Act 2015 it is an offense for any person to intentionally take or make use of a name, business name, trademark, domain name or other word or phrase registered, owned or in use by any individual, body corporate or belonging to either the Federal, State or Local Governments in Nigeria, on the internet or any other computer network, without authority or right, and for the purpose of interfering with their use by the owner, registrant or legitimate prior user. The maximum punishment for this offense is imprisonment for a term of not more than 2 years or a fine of not more than 5 million naira.
Intellectual Property Protection
As an online business it is important to protect your business and the content of your website through the enforcement of the following Intellectual Property Rights including, trademarks (brand name, logo, slogan), copyright (computer program), patent (software/computer program), trade secrets and confidential information (information which gives the business a competitive edge). These rights are valuable assets which may generate income through licensing, prevent infringement and theft by third parties. Safeguarding IP assets ensures long-term growth, builds brand trust and strengthens your position in the competitive online market. Therefore, in the digital world, businesses that leverage on the benefits of IP protection will thrive.
Online Contract Formation
Clear and comprehensive contracts are crucial for protecting both the business and its customers. Therefore, pre-contractual information must be provided to potential buyers before a contract is made. This is to ensure that consumers make an informed choice before concluding a contract (purchasing products) and to prevent disputes over the sale process and the nature of the items sold. Therefore, to protect your website you should include the following policies on your website:
– Terms and Conditions:
– Privacy Policies
– Return and Refund Policies
It is worthy to note that when creating policies it is extremely necessary to include robust cybersecurity measures to emphasize the business’ commitment to protect the user’s privacy and ensure transparency in data handling practices. Additionally, the implementation of encryption, firewalls, and intrusion detection systems can help safeguard customer data from potential cyber threats. If an e- commerce business fails to put these measures in place to safeguard sensitive or confidential data against theft and loss, then it may be liable to a legal suit.
Protect your Customers
When customers visit your site, your intention should be to provide a seamless experience. After customers purchase products, their personal information or data is usually collected and stored on the site or the host site. Therefore, it is important to comply with the relevant data protection laws of the state in which your products are being sold, for example the Nigerian Data Protection Act 2023. Secure payment processing is also vital for online transactions and online businesses must use secure payment gateways and encryption methods to ensure that customers are protected from potential financial risks. Additionally, create a plan for unexpected customer related disputes by providing resolution mechanisms on your site.
Product Liability and Safety
Product liability is the responsibility of a manufacturer, supplier, or seller of a product for damage caused by that product. Claims arise from design defects, manufacturing defects and marketing defects, thus fashion e-commerce businesses must ensure products meet safety regulations and standards, to ensure that nothing goes wrong in the supply chain and the business is protected. Some safety measures include:
-Dealing with reputable vendors who sell quality products
-Compliance with product safety regulations and consumer protection laws
– Providing proper labeling, descriptions and warning details of products being sold
-Having a detailed terms and conditions page on your website
International Sales and Shipping
Selling internationally introduces new legal considerations, thus businesses must:
-Comply with the relevant laws in the country(ies) where your products are being sold.
-Comply with customs regulations and duties
– Understand international shipping options and restrictions
– Consider currency exchange and conversion
Marketing and Advertising
Effective marketing and advertising require compliance with marketing regulations thus, businesses must:
– Comply with advertising regulations
– Follow influencer marketing and sponsored content guidelines
– Use email marketing best practices
Conclusion
Fashion e-commerce businesses face a unique set of legal challenges. By understanding and addressing these issues, online retailers can protect their business, customers, and reputation. Stay informed, seek legal counsel when needed, and prioritize compliance to ensure a successful and sustainable online fashion business.