October 4, 2022

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What Are the Legal Implications When Starting a Subscription-based Business Online?

Starting an online business is usually an exciting yet challenging experience, especially for those doing it for the first time. The potential is almost limitless and with the right amount of hard work, dedication, and luck on your side, you could start making millions in just a few months or years.

Due to the many benefits provided to the entrepreneur and consumer, the subscription-based model is among the online business models that have been gaining huge popularity in recent years. But did you know that it is important to seek legal counsel before starting a subscription business online?

Read on to familiarize yourself with the various legal implications involved in starting an online subscription-based business

What Is A Subscription-Based Business? 

A subscription-based business model is basically where a client makes an agreement with a business to receive certain products or services at defined regular intervals for a set price. While monthly subscriptions are more common, subscriptions could take any shape as long as there’s an agreement between the buyer and the seller.

For example, The Bouqs Co, also allows its customers the flexibility to choose their desired frequency and even further customize their subscription from the comfort of their homes or offices.

Legal Implications of Starting an Online Subscription Business 

A huge part of starting a successful business involves observing compliance with the legal and industry rules and regulations. Starting an online subscription-based business is no exception. Some legal implications to observe in your case may include the following:

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Legitimacy 

Depending on where you’re located, you will, of course, need to secure the right licensing and registration documents before you even get your business website up and running.

These certifications help to prove that you’re operating legally and legitimately. But that’s just a small portion of things you need to do to ensure you stay on the right side of the law as a netpreneur.

Shipping and Return Policy

You might have invested well in online marketing and SEO, and popularized your brand enough to attract a huge customer base and see skyrocketing profits. But wait until customers start complaining on reviews that they received the wrong shipment, the goods were late or never delivered, or the items delivered were defective.

Having shipping and return policies on your small business website can help minimize or avoid instances where you or your business could get sued by subscribers with such complaints over time.

Privacy Protection and Payment Processing Compliance 

We live in a world where identity theft, credit card fraud, and sensitive data theft are increasingly common among the many cybercrime threats in society. If you’ll be accepting digital payments for your subscription-based business, it is your assumed responsibility to ensure your customer’s private data and identity are protected whenever making payments from their credit cards, debits cards, bank accounts, and mobile wallets.

Failing to adhere to the PCI standards for compliance can get you and your business in real legal trouble. The same case might happen if your business doesn’t let the customers know if and how you collect, use, and store their personal information – alongside the measures you take to keep it protected at all times.

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Clarity on Subscription Prices, Renewals, and Cancellation 

When subscribing to any service, customers need to know how much they’ll be paying each month. They should also be notified well in advance in case a price change is anticipated.

And since subscriptions will not be automatically renewed forever, clear policies on subscription renewal, pausing, and cancellation should also be provided. This is often covered under the Terms and Conditions agreements, which the customer must consent to have read and understood before commencing their subscription.

Failure to consider these things could put your business in hot soup legally at some point down the line. A lot goes into starting a subscription-based online business than meets the eye. As long as you understand the requirements and stay compliant, it becomes easy to get the most out of your business while minimizing the chances of encountering potentially lethal business suits.