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If you run an ecommerce business, the various laws and standards you must comply with can make you feel like you are finding your way through a minefield – one misstep and you’re in soup.
Laws, regulations, and privacy standards are constantly shifting, and ignoring them can get you into some severe financial and reputational damage. Whether you’re a small online store or a global player, there are specific compliance requirements you can’t afford to overlook.
Here are the top compliance considerations every e-commerce business should have locked down.
Data Privacy Regulations: GDPR and CCPA Compliance
Data privacy is a concern for e-commerce businesses. Many people are becoming more concerned about how their data is handled. So, regulations like the GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) ensure you handle the data responsibly.
The GDPR applies to any business handling the personal data of EU citizens, no matter where the business is located. It requires total consent from users and strict protocols for data protection, and non-compliance can result in fines of up to €20 million or 4% of annual global turnover, whichever is higher.
Similarly, the CCPA enforces strict rules in California, allowing consumers to know what data is collected, request deletion, and opt out of data sharing. The fines for non-compliance can go as high as $7,500 per violation, so if you want to avoid paying such amounts, they need to implement clear data-handling policies.
Regular audits and tools like marketing compliance software can help ensure your data processes stay compliant and secure.
Payment Security: PCI DSS Compliance
Protecting a customer’s financial data should be the top priority when processing online payments. PCI DSS (Payment Card Industry Data Security Standard) is super important. What PCI DSS does is that it sets rules for storing, processing, and transmitting credit card data to keep sensitive information secure.
If you handle card payments, complying with PCI DSS means encrypting payment data, avoiding storing unnecessary information, and regularly scanning your systems for vulnerabilities. Failure to meet these standards can result in monthly fines ranging from $5,000 to $100,000, depending on the severity of the breach.
Cybersecurity Measures: Defending Against Attacks
E-commerce businesses are constantly under attack from cyber attacks, and the cost can be devastating if your business falls for one of such threats.
SQL injection and DDoS (Distributed Denial of Service) attacks can disrupt operations or steal sensitive customer data. And these types of damages can end up crippling your business’ reputation.
To protect your store, implement multi-factor authentication (MFA), use strong encryption (SSL/TLS), and conduct regular security audits. Tools like Web Application Firewalls (WAF) can also help monitor and block malicious traffic.
Keeping your software updated and using automated malware detection systems are steps to stay ahead of hackers.
Tax Compliance
For e-commerce businesses, tax compliance can get tricky, mainly if you sell internationally or across state lines. In the U.S., every state has its own sales tax regulations, and a default on them results in fines or penalties.
The Wayfair decision made it even more complex by requiring remote sellers to collect sales tax even without a physical presence in certain states.
For international sellers, additional layers of tariffs and customs duties come into play. Many businesses use third-party tools like Avalara or TaxJar to automate tax calculations and avoid mistakes. These tools keep track of ever-changing tax regulations, helping them stay compliant across multiple regions.
