The fact is: most merchants are not fully aware of all of the e-commerce compliance and penalties. And with every passing day, the situation is worsening because people don’t understand the importance of compliance. Even small negligence in the policies and formulation of an e-commerce store can lead to heavy losses for the customers. That’s why you need to take care of the security and reputation of your business. With this article, we aim to help businesses to understand some basic concepts related to E-commerce compliance and penalties.

The Importance of Legal Compliance

Being compliant not only provides protection to your business but also, as a result of it, improves your reputation in front of your customers and stakeholders. It is important to understand that proven compliance breaches can result in a number of risks for your business. The risks include fines and criminal consequences. Fines: Since it’s impossible to throw an entire organization in jail, the most common consequence of breaching legislation is getting fined. And that can result in a heavy financial loss. Criminal Consequences: There are certain legislations that don’t only impose fines for non-compliance but also personal criminal liability. In such situations, the directors of the company can be claimed criminally negligent and thrown in jail. This is why it’s crucial to know about e-commerce compliance and risks when you run an eCommerce store. Brand Damage: E-commerce compliance and penalties can affect your brand. Building a brand name in your industry takes years but it can be ruined for once and for all with a single breach of compliance.

E-commerce Compliance #1: PCI DSS Compliance

PCI DSS stands for Payment Card Industry Data Security Standard. Put simply, it’s a set of requirements that is necessary for any eCommerce website that needs to store, process, and transmit the details of a cardholder. Ecommerce websites are always at risk when it comes to cybercrime. The reason is that oftentimes they have faults in their payment system that have their own consequences. In order to avoid the risks, there are certain security standards that are set by some major organizations for eCommerce websites. Some of the most popular credit card companies like VISA, Mastercard, American Express, Discover, and JCB have their own set of requirements known as PCI DSS which are a must to follow for eCommerce websites in order to allow payment using those credit cards. The reason behind creating these requirements is to protect the sensitive data of customers from getting into the wrong hands.

Why is it necessary for eCommerce companies to be PCI DSS compliant?

Here are a few benefits of being PCI compliant:

Following these guidelines allows you to manage the payment structure for your eCommerce website with high proficiency.
Once your eCommerce company gets PSI compliant, the risk of losing sensitive data gets reduced by multi-folds.
This improves your overall security system.
This helps you build better relationships with your customers and improves your brand reputation.

What are the risks of being non-compliant to PCI for your eCommerce store?

Now that you know the benefits of being a business PCI DSS compliant, it’s also crucial to know the risks of your business isn’t.

As these requirements are set by the top credit card companies themselves, any case of fraud that happened through your website can quickly lead to getting prohibited from using those credit cards.
If a data breach is detected and your business has been proven guilty of it, a considerable amount can be imposed on your company as a fine starting at $50,000.
If there are data breaches happening through your website, liability can be claimed with hefty legal expenses.
Once proved guilty for a data breach, there will be a complete reassessment for PCI compliance. An external Qualified Security Accessor (QSA) will be appointed to check if you can be allowed to accept credit cards again or not which at your expense.

How to get PCI DSS compliant?

Sign up with one of the accredited PCI scanners to fill out a self-assessment questionnaire and run PCI/DSS compliance scan on your store
If any vulnerabilities are found, send the scan report to your hosting or service provider to address.
You can find the list here: https://www.pcisecuritystandards.org/assessors_and_solutions/approved_scanning_vendors

E-commerce Compliance #2: ADA Compliance

ADA stands for the Americans with Disabilities Act. It is a comprehensive civil rights law that was created to protect physically disabled individuals from discrimination.

Why is it necessary for eCommerce companies to be ADA compliant?

Being ADA compliant helps you to avoid potential lawsuits.
Every 1 in 4 American citizens are disabled and if your website isn’t ADA compliant, you might be losing a pool of customers.
If your website is ADA compliant, it can bring more leads to your business.
Building an operable and navigable eCommerce website can be beneficial for both customers and founders.
Being ADA compliant ultimately helps to improve your website SEO.

What are the risks of being non-compliant to ADA for your eCommerce store?

Ignoring ADA compliance while running an eCommerce store invites lawsuits and leads to wastage of money and time.

Lawsuits and demand letters are on the rise in the last couple of years resulting in very common, out-of-pocket expenses, over $25,000, and sometimes over $100,000.
Affects your rankings in search engines.
Damage your brand reputation.
Legal issues caused due to non-compliance can lead to endless litigations and consumer complaints.

How to make your online store ADA compliant?

Making an online store ADA compliant by redesigning usually requires a complete rebuild of the frontend code and will cost many thousands of dollars. It will also have to be constantly updated because the standards change all the time.
Another way is to implement a third-party solution in the existing store and we use Accessibe as an ADA compliance provider (check a wheelchair icon at the bottom of this page). This will automatically implement any changes to the ADA standards to your store right away and in the future without any changes to the code. At $49, this is a protection you can not afford to ignore. I personally know a small business owner whose business was almost whipped out by an ADA lawsuit and will take years to recover.

E-commerce Compliance #3: Privacy Policy

E-commerce compliance must address privacy. Privacy policy in a nutshell is a statement that you provide on your e-commerce website explaining how you collect, process, and disclose personally identifiable information (PII). PII is any data that can identify an individual. If your website (and most do) collects details like IP address, cookies, email, name, phone number, and address, you need a proper privacy policy. “We respect your privacy” statement is great but does not cut it as a privacy policy. In the proper policy, you have to disclose what information you collect, how you use it, and who you share it with. If you think you do not share customer’s information with anybody – think again! If you are using a Facebook pixel, Google Analytics tracking, Mailchimp, or any other third-party code in your store, you are sharing visitors’ and customers’ information with those companies and that has to be disclosed in your policy as well as the reason you are doing this.

Penalties for not having a proper privacy policy on your e-commerce website:

Not having a proper privacy policy on your eCommerce store can get your business penalized. The fine starts at $2,500 per violation (read “per visitor” and do the math). Moreover, you don’t just need a privacy policy but you also need a proper strategy to update it so it stays current with the current laws and regulations.

How to add a valid Privacy Policy in your online store

One way to prepare a privacy policy that will not get you in trouble is to hire a privacy lawyer to create one for you. Make sure that lawyer is specializing in this field and will notify you when there are any changes to the privacy laws in the states, provinces, or territories where you sell your products and send you an updated policy. This works but that is the 1900s way of doing things which is expensive and takes a lot of time.
Use one of the hundreds of online privacy policy generators – some of them are ok some are useless. Problem is, you do not know if they are good until it’s too late plus you will need to monitor all the changes in the privacy laws in all the territories you are operating.
Use a “privacy policy as a service” like Termageddon which will let you generate a legally valid privacy policy and will keep it updated for you automatically. Yes, there is a small monthly fee but this is nothing compared to the cost of a lawyer or legal fees you may be facing. At $10, this service is super cheap protection against possible legal trouble. You can check how it works by clicking on the Privacy policy link at the bottom of this page.

Final Words

I hope you find this list useful and urge you not to ignore the law so you stay out of legal troubles and focus on growing and business development.

3 Profound E-commerce Compliances You Can not Afford to Ignore