Saturday, July 23, 2016
The Biggest Legal and Financial Risks of E-Commerce
Running an e-commerce business isn’t as cheap as many people think it is. The running costs are extremely high. This is why you can’t allow financial complications to enter into your process. They will also harm your reputation, which will affect sales. Some may even end with prosecution.
Be wary of these risks in e-commerce!
One of the biggest concerns for any e-commerce company is the security of their data. After all, you’re going to have consumers giving you their bank details. Now, you may not be able to access intimate knowledge of these details yourself. Even the business owners usually can’t get a hold of that information so easily, as the data should be protected. But if a cyber criminal were to access the data somehow, then you’d be in a lot of trouble.
You have a legal obligation to make sure that customers’ information is protected a much as possible. You need to make sure you follow the SSL/TLS security protocols. This ensures that all information exchanged between you and the consumer is encrypted. If you’re using a third-party to collect money, then you need to ensure that they have adequate security measures.
Fraud is a very wide-reaching term. Even if we restrict the definition to the world of e-commerce, there are still a lot of dangers covered by that term. But fraud is a big worry both for owners and users of an e-commerce business. The most prevalent problem for the owners is “return fraud”. A criminal consumer may take advantage of your “no questions asked” return policy. They may order a new item, then “return” it within seven days. The returned item, however, may be counterfeit or second-hand. Consumers may also claim never to have received an item and request another.
For consumers, the worry stems from the fact that they’re giving you their card details. We’ve already discussed the risks inherent here in the above section. But if data leaks were to result in fraudulent purposes - or if an employee uses such information to make purchases - then this is severe. In such a case, you may need to protect yourself against a claim or even a charge of credit card fraud.
There have been instances in which a consumer may cancel a payment via their bank for an item they’ve received. This, technically, may fall under credit card fraud. (It could, of course, simply be a misunderstanding.) The bigger worry in this area is that a consumer doesn’t pay after agreeing to have paid for the item at a later date.
Finance is becoming more and more popular an option for e-commerce outlets these days. It’s basically considered a must if the bulk of your products are priced among and above the three figure range. But this option, of course, comes with the risk of a consumer not paying. That’s why many businesses choose to work with a third party who can offer help in collecting these debts. Unpaid debts constitute a big portion of the total losses that e-commerce companies suffer. Don’t let your business fall into the habit of allowing consumers to miss payments.