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Legal issues within retail in the USA

With a federal system of government, there is a wide range of legal influences on any business looking to trade in to the US. Some legislation is set at the federal level, but most consumer legislation is set at the state level. The following section provides a non-exhaustive list of key legislation and is intended to highlight the main legal instruments that will affect a merchant looking to trade electronically in to the US.

Advice from the Federal Trade Commission states that whilst there is a ‘cooling off period’ of 3 days for sales over $25 made in the physical store environment, an exception is currently in place for sales made entirely online, or by mail or telephone. This means that unless the sold good is defective or if the seller breaks the sales contract, then the consumer has no right of return.

However, a survey by e-BuyersGuide.com found that 86% of online shoppers rated return policies of significant importance in choosing an online merchant. With this level of expectation, international merchants would be advised to implement a returns policy that competes favourably with other in the market. For example, free returns and an extended returns period; 30 days isn’t uncommon.

Smallbusiness.com notes that individual states may have tighter regulations in this area but many will rely on the retailer’s own terms of contract to state the consumer’s rights in this situation.

Data protection is an issue decided at federal level with the Federal Trade Commission having overall responsibility for its implementation.

However, the state of California has its own acts covering data protection which will impact any business that trade into the state; effectively making it a compliance requirement for most website operators aiming at the US market.

Intellectual property rights are well covered in the US at a federal level and there are several other important elements to take notice of, such as the PCI DSS payment card rules and those relating to the provision of credit.

50 states represent a mixed legal picture with most contract law being set at this level. The Uniform Commercial Code is an effort to harmonise requirements across the 50 states, but is not federal law and it is up to the individual states to adopt.

The key federal level bodies involved in consumer facing business include The Federal Trade Commission, who are responsible for ensuring consumers are treated fairly; the Federal Communications Commission, who regulate interstate and international communications by radio, television, wire, satellite and cable; the United States Copyright Office, and the United States Patent & Trademark Office.

Law at the state level is a mixed picture, but there are several projects that seek to bring some harmonisation. For example, the Universal Commercial Code.

Official sources of information include:

www.uscourts.gov US. Courts

www.ftc.gov US. Federal Trade Commission

www.uspto.gov US. Patents & Trademarks Office

http://copyright.gov US. Copyright Office

www.sba.gov US Small Business Administration

www.privacy.ca.gov State of California Department of Justice Office of the Attorney General

http://leginfo.legislature.ca.gov California Legislative Information

TAKEAWAY: This section provides a high level overview of the complexities of the US legal system. It is advisable to seek professional, local, advice before trading in to the country. Design a returns policy that competes with local merchants and highlight to consumers.

Disclaimer

This section of the eCommerce Worldwide US Cross-Border Trading County Guide document is provided for general information only and does not constitute legal or other professional advice. eCommerce Worldwide does not owe any duty of care to any reader of this section of the Country Guide document. You should consult a suitably qualified lawyer on any specific legal problem or matter.