First, do you mind telling us a little about yourself and your role at sprintlaw?
I’m Regie, one of the lawyers at Sprintlaw. Every day, I work with passionate founders and online businesses to help them navigate the legal world – hoping to make legal help a lot more accessible and simple.
When it comes to structuring a new online store, is working as a sole trader sufficient or do you recommend a different structure?
Yes, starting as a sole trader makes complete sense for a new online store – as long as you know what this means! Running a business as a sole trader is cheaper and easier from an administrative point of view but it also means that you are personally responsible for any liabilities (such as debts) that the business incurs (read more here). Typically, as the business grows, you may want to start future-proofing your business and think about scaling it. This is when most businesses set up an independent company. However, though a company may shield you from personal liability and in some cases protect the business’ assets, it also carries additional responsibilities (such as annual fees and reviews, reporting obligations and director duties). In any case, the structure you choose will depend on where you plan to take the business and your risk appetite.
For digital nomads or people offshore trying to sell into Australia, are there any legal considerations they should be aware of?
If you’re selling to customers in Australia, you should be aware of the Australian Consumer Law. This body of law protects consumers all across Australia (despite where your products are from or whatever your T&Cs might say). For example, if a customer receives their product and there is a ‘major fault’, they’ll be entitled to a “remedy” – typically a refund, repair or replacement of that product. We’ve explained Australian Consumer Law here.
As a first step, all online businesses should be thinking about having these documents in place as they’re quite important! Not having these documents exposes you to lots of risk and no clear process when you manage issues with customers.
What are some common issues that new online stores might face, and how should they prepare for them?
Many online businesses aren’t completely aware of their obligations under the Australian Consumer Law when it comes to refunds, returns and exchanges. There are very strong protections for customers under the law and no matter what your terms and conditions say, these laws will prevail. To make sure you’re across these laws, you should speak with a lawyer and have lawyers draft your terms and conditions in line with these laws. In addition, what businesses should be aware of is that they could be fined for misleading and deceptive conduct if they mislead consumers as to their rights under the Australian Consumer Law. This could happen, for example if a business states that a consumer is not entitled to something they are actually entitled to under Australian Consumer Laws in their terms and conditions.
What are some common mistakes that new stores make?
One of the most common mistakes new stores make is around warranties. A lot of stores talk about having limited warranties – for example a 2 year warranty for all items. What they don’t know is that regardless of what their terms and conditions might say, the Australian Consumer Law will often offer broader protections to the buyer. This means that if a product has a major fault or defect, a customer may still be entitled to a remedy (whether that be a refund, repair or replacement) no matter what a business’ limited warranty says. And, if you do have a ‘limited warranty’, you’re actually required under the Australian Consumer Law to include mandatory wording where you explicitly state that the customers are already protected under the Australian Consumer Law anyway.
What are some key areas of compliance that people may not be aware of?
Aside from the Australian Consumer Law, there are privacy and spam laws that affect how online businesses work. For example, it’s very common for most businesses to be sending out mass marketing emails. However, it’s actually illegal to do this if you haven’t received consent from the recipient. It’s also compulsory to give email recipients the option to unsubscribe from marketing emails.
If your business’ reputation is reliant on online reviews – as so many businesses are these days – it’s important you’re familiar with the laws surrounding this, too.
For those who are starting with a single product they’ve developed themselves, how should they protect your IP?
It really depends on what product you’ve developed. IP is a bit tricky and practically, there is no fool-proof way to completely stop someone from stealing your IP. The key is in making sure your terms and conditions are clear about your IP and to have IP clauses in any contracts you have with your suppliers, etc.
For starters, you should also start by protecting your logo, branding and any other business name you’ve registered.
For readers who are looking for specific advice or legal help, how should they connect with you?
Sure! Sprintlaw is always open to chatting about your particular situation and to see if we can help in any way. You can email the team at [email protected] or visit our website for more guides and information, www.sprintlaw.com.au.