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There are many different roles an eCommerce business owner like you has to play when running an eCommerce business. For example, looking after marketing, customer service, sourcing products, payroll and producing content for your eCommerce website. As an eCommerce business, you may carry all your business activity through in-house staff. Alternatively, you may, like some eCommerce companies, decide on eCommerce outsourcing for some business areas to other third-party companies. This may be a helpful alternative for your business and possibly something you have not yet considered in the eCommerce industry. This article will explain outsourcing and the legal issues a UK eCommerce business could face.
Outsourcing
Outsourcing is where your eCommerce business uses a third party to carry out particular business activities. A third party may be:
- an individual;
- a business or
- a company.
Outsourcing in your online business can be a beneficial tool for running your internet brand. It can help reduce expenses and give you expert advice in areas you are not too experienced in. Overall, outsourcing can free your hands and allow your eCommerce business to increase efficiency by engaging external service providers to assist you with certain tasks
Legal Issues
Whilst outsourcing in your eCommerce business may produce positive results for your online business, you can face legal issues when you outsource. We look at some potential legal issues below that your internet brand could face when outsourcing.
Data Protection
A significant legal issue a UK eCommerce business faces when outsourcing is data protection issues. When you outsource areas of your business, you may need to transfer and process data, which requires you to comply with UK data protection legislation. In addition, you may pass personal data and confidential information to the party you outsource to. This runs the risk that they do not protect your business’ confidential information and personal data.
The company you outsource to could carry out business activity as a processor, controller or joint controller in terms of the UK data regulations. It is, therefore, essential that you create a robust legal contact with the third-party business you outsource to. It may need to include details such as:
- requirements to ensure data is safe and secure;
- only using personal data upon instructions; and
- assisting in ensuring both parties can comply with UK data protection law.
Slavery and Human Trafficking
If your eCommerce business meets legal thresholds concerning the Modern Slavery Act 2015, you will need to comply with legal issues to do with slavery and human trafficking requirements. This will affect your outsourcing as the party you outsource to may need to comply with your modern slavery policy. This is because you have a legal duty to report on the processes you have in place regarding this subject for your suppliers.
Bribery and Corruption Issues
As an eCommerce brand outsourcing business activity, you may want to consider legal issues that could arise in terms of bribery and corruption. The UK Bribery Act 2010 is a law all businesses should comply with. To assist you in avoiding a legal issue concerning this, you should include provisions in your contract with the outsourcing company to help with this. One way to do this is to have a provision that binds the outsourcing company to adhere to any anti-bribery and corruption policies your internet brand has.
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Key Takeaways
Your eCommerce business may engage in outsourcing rather than carrying out all your online business activity in-house. This is where a third party, such as another business, carries out a particular business activity for your eCommerce brand. When outsourcing, you can face legal issues, and this article has considered some legal issues your eCommerce business may face. It first considers avoiding data protection issues that could arise if, during outsourcing, personal data is involved. The article also points out that if your internet business meets the threshold for modern-day slavery and anti-trafficking law, you may need to consider these legal issues when outsourcing. A final legal problem that could arise when outsourcing, which the article explains, is the importance of avoiding corruption and bribery matters. One way to prevent this is to create provisions in your outsourcing contracts.
If you need help understanding what outsourcing is and the legal issues an eCommerce business can face, contact our experienced eCommerce lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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