Key Legal Issues for Online Retailers to Be Aware of
E-commerce and mobile commerce offer retailers the advantages of lower operational costs, a 24/7 sales platform and an expansive customer reach. Although online transactions are subject to many of the same legal principles applicable to physical transactions, they also raise certain new legal issues, particularly contract and data privacy issues.
Many traditional state law contract principles (e.g., offer and acceptance) apply to online transactions, but with a twist. For example, retailers typically use "clickwrap" or "browsewrap" agreements on their websites to bind users to their website's terms. A clickwrap agreement requires an express acceptance of the terms through the "click" of an "I accept" or similar button, whereas a browsewrap agreement is simply a posting of website terms, typically through a hyperlink on the homepage, which states that use of the website signifies acceptance.
Courts have considered whether clickwraps and browsewraps create enforceable contracts. In general, clickwraps have been held to create enforceable contracts, unless the terms are unconscionable. Since browsewrap agreements don't require affirmative action by the website user to indicate assent, the validity of a browsewrap agreement depends on a factual analysis of whether the user has actual or constructive knowledge of the terms of the website. The cases indicate that the more conspicuous a website's terms, and the greater the confirmation that a user has consciously elected to accept the terms, the more likely the terms will be enforceable.
The most significant new legal issues created by online retailing relate to consumer privacy and data security in light of the volume of personally identifiable data (i.e., data that can identify a person or a mobile device) collected in such transactions. This data is often shared with third parties delivering content, display ads or performing data analyses in connection with online transactions. Privacy issues are magnified by the widespread use of mobile devices and mobile apps, which store and use personal data in more complex ways than internet browser software, and consequently may pose a greater security risk.