Selling Across Borders? Know the Local Laws

Apr 02, 2014 1:30 PM  By

global-flags-850It is important for U.S. businesses involved in international commerce to know and understand applicable local laws. Once a U.S. merchant moves into local or regional fulfillment, it becomes a local merchant and must abide by the laws of the country in which it is operating.

In Europe, as well as Latin America, stringent laws protect consumer rights. In Germany, for example, consumers have the right to return any item within two weeks of purchase with no questions asked.  Consequently, high return rates are common.

Laws also govern advertising, both in terms of content and target audiences. In some countries, laws are strict regarding sales to minors and the definition of the age at which one is considered a minor varies. Some products, such as a small knife, can be treated differently in different countries. One might consider it a weapon whereas another might consider the same knife to be a utensil.

The sale of alcoholic beverages is another product where regional differences occur. In the United States, ecommerce sales of alcoholic products are highly regulated. In Europe, selling alcohol is less complex.

Personal data protection is an equally complex area, especially within the European Union (EU). The EU imposes a cookie directive whereby merchants must make customers aware of the implications of placing a cookie on their computer, what kinds of data are being collected and for what purposes. Consumers must accept all these terms before a cookie can be placed.

In the EU, personal data cannot be sold to third parties without an individual’s permission. There is no such prohibition in the United States. Moreover, differences exist over what constitutes “private data” in the United States and Europe. An address or a phone number could be considered private depending on the European country.

In online marketing, practices that are allowed in the United States are illegal in the EU. In some countries within Latin America, China and other Asian locales, the law requires that private information developed as  a result of a sale by a local merchant must be stored within that country’s borders,. Thus, a retailer website operating in those countries cannot be run by a central infrastructure in the United States. Moreover, payments on purchases made in China must be collected in China.

In Japan, too, data protection laws are stringent. If, for example, someone’s private information is inadvertently disclosed, the offending company must make a public apology and explain the misdeed in a newspaper notice. Repeated offenses can lead to a firm losing its business license.

Uwe Bald is vice president of international business development for Hermes, a provider of internationalization services to Europe, Russia, China and Brazil.