FTC E Commerce Guide: Everything You Need To Know
An FTC E Commerce guide will help you understand the details of e-commerce transactions.3 min read
An FTC E Commerce guide will help you understand the details of e-commerce transactions. An e-commerce transaction occurs when a payment is provided at the beginning of a sale and then a product is provided or delivered as a result. Typically, the product should be delivered within a set time frame, and the transaction should abide by terms and conditions set by the company.
The acronym FTC is short for the Federal Trade Commission. In the United States, the FTC is the primary agency responsible for regulating e-commerce activity, such as online advertising, consumer privacy, and commercial emails. The FTC has an online portal as well as an e-commerce guide to help provide an overview of applicable rules and regulations that should be followed by companies.
Defining Terms and Conditions
Before a company begins to offer e-commerce transactions, the company should create and outline a clearly defined policy for the transactions. Any terms and conditions should abide by the expectations of the FTC, and should also explain to the buyer that they are entering into a contract when they agree to purchase products or services from the company. If the sale is done through a website, these terms and conditions should include the following information:
- Delivery details for the order
- Shipping details for the order
- How and when refunds will be processed
- Payment expectations and requirements
- Exclusions of liability for the company
- Laws and jurisdiction applicable to where the business is located
- Terms and use of the company's website
Regulations Enforced by the FTC
There are certain regulations enforced by the Federal Trade Commission which should be followed by all e-commerce businesses to avoid consequences. Some of the areas protected by the FTC's regulations include:
- Customer data
- Multi-level marketing
- Payment protection
- Plain English disclosure
- Environmental claims
The regulations enforced by the FTC can be extremely complicated and may require a lot of due diligence by anyone pursuing a business opportunity. A business opportunity is any agreement where a buyer obtains the rights to sell, distribute, or offer goods and services under certain circumstances. The FTC holds regulations for these business opportunities, along with 23 states which have also passed laws enforcing regulations.
As of April 2016, the FTC updated their consumer protection expectations. This protection was issued by the Organization for Economic Cooperation and Development, also known as OECD. The FTC endorsed the updated expectations of the OECD for several reasons. First, due to the opportunity to strengthen the trust of consumers, and second, because of its potential to expand the size of the electronic and e-commerce marketplace.
Companies must be aware of consumer protection laws and ensure that their practices abide by all of the rules. One example is the Gramm Leach Bliley (GLB) Act. The GLB Act requires that if a company collects any personal data from consumers, they must explain their practices and efforts to protect the sensitive data.
Another recommendation by the OECD is to regulate the use of plain language in terms and agreements. This regulation is outlined in the Increased Use of Plain Language Disclosure. This effort requires that e-commerce companies use plain and simple language in their consumer agreements, terms, and notices. This requirement is aimed to protect the consumer by simplifying language and reducing confusion from overly complicated terms.
The OECD also recognizes the need for protection through payment processing. In the Increased Payment Protection Disclosure, protection is dependent upon the payment mechanisms that are used during transactions. Its recommended that there are minimum levels of consumer protection developed to provide security across all payment mechanisms.
Protecting Your Business
It is also essential to business success to include terms and conditions that protect your business. Certain precautions should also be taken to protect the personal interests of those connected to the company.
Another way to protect your business is to be aware of fraudulent transactions. In most cases, transactions should be expected to go smoothly, but occasionally fraudulent transactions may occur. Fraudulent transactions can occur in various ways, such as the use of false payment information or stolen payment information. Another form of fraud occurs when the buyer orders a product but claims to never have received it, even if they have.
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