Online Transactions and Associated Protections
In order for retailers to take advantage of the benefits of online transactions, they must familiarize themselves with the legal implications of e-commerce. With constantly changing state and federal regulations, it is important for online retailers to keep track of the legal standards that govern online sales and purchases.
Since online sales constitute taxable income, businesses are required to pay income tax on all revenues from Internet sales. The income tax also includes international sales because the Internet is a global forum. Businesses may be required to charge sales tax for online transactions if the business maintains a physical presence within a state that charges online sales tax.
In order to complete online transactions, customers typically provide payment information electronically. Accordingly, online retailers should have protections in place to ensure that hackers cannot gain access to the customers' personal information database. Businesses should ensure that employees have restricted access to this information as a further precaution. Most states have implemented laws that require retailers to report any breach of security to customers and respective law enforcement agencies.
Businesses that utilize cloud computing must take note of further legal implications. Online retailers may use application service providers to process customer information, such as credit card payments. In this case, the customer information is stored remotely rather than on the retailer's own internal network system. Therefore, it is important for online retailers to be aware of the legal implications involving customer privacy and cloud computing during online transactions.
Specific federal and state regulations aim to protect consumers in online, mail order, and door-to-door transactions. The Federal Trade Commission authorizes consumers to cancel a door-to-door sale