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Shopify is a website that can help you set up your online business, providing website templates and helpful resources specific to e-commerce. You pay a monthly subscription fee based on what plan you want. In return, you get access to their various services. You can design your business website using one of their multiple themes, and they provide a secure payment processing system.

The site is convenient and can simplify the startup process, but there are a couple of things that the site does not do for you. For instance, making sure you meet your obligations under New Zealand consumer law. This article will explain what laws may apply to your Shopify business and some legal aspects to your relationship with Shopify that you should be aware of.

Complying With Shopify’s Terms of Use

When you build your business with Shopify and sign up to one of their plans, part of your agreement is adhering to their Terms of Use and other policies on their website. You have signed a contract with Shopify, and you are obliged to operate your business in line with the policies they set. This means that:

  • if you breach their terms of use, they can terminate your account;
  • if any of the materials you upload to your site is objectionable, they can remove it; and
  • they can increase the monthly fee you pay in your subscription plan with 30 days notice.

Their Terms of Use include legal disclaimers, limiting their liability if you break the law or have issues with a customer.

They are not a party to any contract you make with a customer, so they are not liable if something goes wrong.

Complying With NZ Consumer Law

When you regularly sell consumer products (items the general public buys for personal or household use), you are ‘in trade’. This means that NZ consumer laws apply. You need to:

  • make sure that you do not mislead or deceive customers;
  • only make claims about your products that you can prove;
  • set fair prices, and be clear about your pricing; and
  • provide all relevant information about your products, like how customers can safely use them.

Shopify is not responsible for making sure you comply with the applicable law. So, you need to make sure you know your obligations to consumers.

Returns and Shipping

As an extension of your obligations under NZ consumer law, you have to provide a remedy to customers if they complain about a legitimate fault in your products. If you investigate the complaint and find that it is fair, you need to give the customer a remedy if the product:

  • is defective;
  • is unfit for purpose they bought it for;
  • does not match the description you gave the customer, e.g. does not match the photo on your website;
  • was damaged in transit, or never arrived; or
  • is not able to be legally sold by you.

Dealing with customer complaints and subsequent remedies is your responsibility, not Shopify’s. So, you should have a shipping and returns policy on your website to inform customers of how you deal with such situations.

Shopify does offer a shipping service that can streamline the process and make organisation easier, but this does not absolve your business of its obligations.

Business Administration Issues

Shopify helps you with your business’s online aspects and where you host your e-commerce, but your business’s operation is up to you. So, you need to make sure that you:

  • understand your tax obligations as an online business, especially if you are selling internationally;
  • keep clear business records;
  • comply with the reporting requirements of the kind of business you run, e.g. complying with the annual reporting requirements of your company;
  • protect customer’s personal information with a good privacy policy; and
  • know the laws around dealing with employees, if you have any.

An advantage of Shopify is that it offers a wide variety of secure payment systems that are PCI DSS compliant.

This means that they follow a secure processing standard that aims to prevent credit card fraud. This makes things easier for your business, as you do not have to worry about incorporating that into your plan.

Intellectual Property

Any material that you upload to your Shopify website is yours and yours alone. You have the responsibility of maintaining it. If you own trade marks or other intellectual property as part of your business, you should make sure you have taken steps to protect them adequately.

As part of their Terms of Use, Shopify has a licence to use your trade mark in promotion of the services they provide.

You should note that you agree to this when you use their services and sign up to one of their plans.

Key Takeaways

Using Shopify can be a great way to set up your new online business, and they are a great resource for new entrepreneurs getting their feet off the ground. But, you still have obligations as a business under the law, and you should be aware of what you agree to in their Terms of Use. If you would like more information or help with your Shopify business, contact LegalVision’s New Zealand ecommerce and online business lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What exactly does Shopify do?

Shopify is an online market platform that lets anyone set up an online business and sell their products. They provide website templates and handy resources for running an online store.

Can I operate my dropshipping business on Shopify?

Yes, you can operate your dropshipping business on Shopify. They have some good resources with information on dropshipping and provide a list of suppliers (through Oberlo) to possibly source your products from.

Can I use Shopify in NZ?

Shopify is a publicly registered company that many NZ businesses use for their online stores. Although, you should note that they are not responsible for making sure you comply with your own legal obligations as a trader in NZ.

Is Shopify good for beginners?

Shopify can be a good option for businesses that are just starting out with online stores. You do not have to worry about coding your own website, and they have various services you can use to make the process of starting up an online business easier.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

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