Many small businesses are pivoting to an online business to stay relevant and retain customers during the Covid-19 lockdown.
Having a strong presence online will of course continue to be useful after the lockdown restrictions are lifted, as it builds brand awareness and improves accessibility for customers.
However, when pivoting to an online business, there are a number of legal mistakes to avoid.
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In a recent news story, Joe Wicks, aka The Body Coach, had trouble trying to use copyrighted music for his online fitness classes. Like Joe, if you are setting up online you will need to take care not to use copyrighted material online like music, pictures or writing, without permission. This is just one example of a legal issue that might arise when you are pivoting to an online business – read on to avoid eight common legal mistakes.
#1 – Not making the most of your website build
Various online website builders are available that let you create and run your website yourself. Alternatively, you could commission a bespoke website from a website designer, if your budget allows. To help ensure your website is legally compliant and fit for purpose, check that:
- your site is optimised for mobile phones
- your site is secure (has https at the start of the address)
- you have the right ecommerce features (if you will be making online sales, you may prefer a website builder that offers features like promotional discounts or customisable shipping costs)
- your website can comply with payment security requirements such as two-factor authentication (you may need to liaise with your bank or payment service provider)
- you have picked a domain name that is similar to your online business’s name and registered all of the extensions you might need (e.g..co.uk, .com, .org) and likely spelling variations of the name. A shorter name is usually better, as there is less risk of losing traffic to typos. Use sites like GoDaddy to check if your domain name is available.
#2 – Not checking the terms of an online marketplace
If you do not want to set up or maintain a new website, you may consider selling through an online marketplace like Amazon or Etsy, which provides a large pool of potential buyers and can save you money on marketing and maintenance of your site. However, make sure you are aware of the marketplace’s fees and commissions payable as these vary.
The terms and conditions of an online marketplace can also place restrictions on how you sell and distribute your goods. For example, you may be required to deliver your goods to customers within a certain time, you may not be allowed to send marketing materials or communicate independently with customers, and you may be required to allow returns for a longer time than would be otherwise required by law.
>See also: Registering a company name – a Small Business guide
#3 – Failing to check your branding or other work is original
As Joe Wicks found out, writing, music and pictures are usually automatically covered by copyright (so you’ll need the copyright owner’s permission before using their work on your site). If you don’t get the right permissions, the owner may demand that you remove the work from your site and pay them compensation.
Make sure that your branding and website design is original and does not closely resemble any recognisable brands. Many well-known businesses monitor new sites to check whether their logos, slogans or brand names are being infringed (and may require offending sites to be taken down or amended, and/or compensation). You can search for registered trademarks and registered designs online, and it’s also a good idea to conduct general internet research to check whether any competitors have used similar branding to yours.
#4 – Not including proper terms and conditions on your site
By law, you must include certain information on your website (including contact details for your company, product and service information, privacy and cookies information, cancellation, refunds and deliveries information and more). As part of ensuring you have the right information on your site, make sure you have the following policies and terms and conditions:
- terms and conditions of sale to set out practical terms like payment and delivery, limit your liability as much as possible and protect your intellectual property
- a cancellation form for customers to use if you sell to consumers (rather than other businesses only) as they have greater rights to cancel online purchases compared to face-to-face sales
#5 – Not bringing terms and conditions to a customer’s attention
When designing your website, you must ensure your terms and conditions, and policies, are clearly brought to a visitor’s attention. For example, you should:
- provide a clear link to your terms and conditions of sale in the footer of each page and when a customer makes a purchase, and make sure the terms can be downloaded and printed
- provide a link to your privacy and cookies policies in the footer of your site as well as when a visitor inputs personal information
- use a cookie banner when a visitor first lands on your site, to tell them what cookies your site uses and ask for their consent before placing cookies on their browser (consent boxes shouldn’t be pre-ticked)
#6 – Forgetting about consumer rights
Consumers have wider rights to return goods or cancel booked services when buying online than in person. You’ll need to know your customers’ rights around returns and cancellations, in order to maintain your reputation and good customer relationships.
Make sure you use a reliable freight or delivery provider, so that your delivery timeframes are kept to, and you are clear on what delivery charges will apply (so you can charge customers correctly).
You should also be aware that you usually cannot charge an extra fee based on the type of payment a customer uses, and you usually cannot refuse payment to EU customers based on the country their payment card is registered in.
#7 – Sending inadequate invoices
There are strict legal requirements for what to include in an invoice, depending on whether you are VAT registered and your sales include VAT, or you do not charge VAT either because you are not VAT registered, or because you are selling zero-rated or exempt goods or services. Usually you should be using the same invoice templates for online sales as you would for your offline business, if you are selling the same goods or services.
#8 – Falling foul of marketing or data protection laws
Once your business is set up, you’ll need to get traffic to your site. Depending on your budget and what type of business you are pivoting from, you could do this yourself or it may be worth hiring a marketing specialist to help you get some traffic. Make sure you are careful about complying with data protection and marketing laws, for example:
- If you are emailing your existing customers, you can only market similar products and services to those they have bought from you before and you must include an unsubscribe link in your emails
- If you are paying influencers to promote your brand you’ll need to make sure it is clear to potential customers that they are receiving a benefit to promote your brand and that their content is labelled correctly as an advert
Marion Kennedy is a senior legal editor at Sparqa Legal
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