Businesses are turning to eCommerce for selling their goods to customers all over the world. Selling your goods online makes them more accessible, and you can do it from the comfort of your own home. However, whether you are turning your crafting hobby into a business or diversifying company sales, the same laws will apply to you when selling goods online. When you sell goods to consumers, the law requires that you maintain a certain standard of quality. You also have to consider privacy issues and how they affect your business online. This article will go through various legal considerations when selling goods online in New Zealand.
Being in Trade
The laws that apply to you will depend on your trade status and whether you qualify as ‘in trade’. The purpose of this is to differentiate your commercial sales from private sales between consumers. It will depend on the context, but you will typically be ‘in trade’ if you:
- sell goods regularly;
- buy or make goods to sell them on;
- register for GST;
- employ sales staff; or
- operate from a company or other business structure.
If you sell online and you are in trade, you should make this status clear. Some online marketplaces let you do this with a marker on your profile. Otherwise, you can include a clause detailing this fact in your business terms and conditions.
Consumer Guarantees
When you sell goods in trade to consumers, you must ensure those goods meet the law’s consumer guarantees. These are promises you make about your product quality and the standard of your service. When you sell goods online, you guarantee they are:
- fit for purpose;
- of reasonable quality; and
- the same as any descriptions or demonstrations you give.
When selling your products, you also guarantee that you:
- will deliver them on time and in good condition;
- sell your goods at a reasonable price where you have not already determined one;
- have some method of repair available; and
- have the legal right to sell these goods.
Therefore, you need to take steps to ensure you meet these standards that the law requires. If you fail to do so, then you need to offer a remedy to the affected customer. This will be a:
- repair;
- replacement; or
- refund.
For example, if something damages your product in transit and your customer receives broken goods, you need to remedy the issue. You may send them a replacement product or refund their purchase.
Continue reading this article below the formFair Trading
The law also regulates what you can say about your products and how you advertise for them. In particular, you cannot:
- make unsubstantiated claims about your goods;
- mislead your customers;
- engage in generally misleading or deceptive conduct; or
- use unfair sales tactics, such as bait advertising.
You cannot say things about your products that are untrue or misleading. Generally, if you do not have the evidence to back up something you say about your products, your claim is not substantiated. This also applies to your pricing and how you advertise your sales.
For example, say that you run a promotion advertising your products on sale at $39.99. However, this number does not include GST or delivery fees. Therefore, it is not the final price a customer will pay. This will usually qualify as misleading your customers, so take care with what you say.
Privacy Law
When you sell your goods online, you will likely collect customers’ personal information. This includes:
- their names;
- delivery addresses;
- debit or credit card details; and
- cookie data.
The law requires that you handle this personal information with due care, according to the Privacy Act. It has specific standards for how you collect, use, and store any personal data. You also need to ensure your customers know you collect this information and get their consent when you need it.
For example, privacy law requires that you protect personal information with safeguards appropriate for its sensitivity. You will likely collect customers’ credit card details online when they pay for your goods, so you need to ensure you secure the connection they send this information through.
If you sell your goods to residents in the European Union, their data privacy laws will also apply to your business.
Starting a Business and Selling Goods Online
On top of the legal issues specific to selling goods online that you need to consider, you also need to navigate the concerns of starting a business online. These include:
- choosing an appropriate business structure;
- creating a contract online;
- email marketing;
- drafting key online legal documents;
- tax obligations;
- record-keeping requirements;
- employee obligations;
- protecting intellectual property; and
- any reporting requirements.
Key Takeaways
Selling your products online can be an effective source of revenue for your business, and you can access an entirely new range of customers. However, you need to ensure that you are meeting your legal obligations when you do so. Otherwise, you could face financial, legal, and reputational penalties. If you would like more information or help selling your goods online, contact LegalVision’s eCommerce lawyers on 0800 005 570 or fill out the form on this page.
Frequently Asked Questions
In trade refers to your commercial status when selling goods or services. If you frequently sell goods or services, or purchase goods for the purpose of selling them on, then you are likely in trade.
Both the Consumer Guarantees Act and the Fair Trading Act will apply to you if you are in trade when you sell goods online. If you sell goods as a one-off, this will likely be a private sale, and consumer law does not usually apply.
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