Direct-to-consumer (“DTC” or “D2C”) e-commerce businesses have unique legal needs and, as such, need unique DTC e-commerce attorneys like the ones at Revision Legal. As we say, we understand D2C businesses because we are one (even though our product, of course, is delivered in conference rooms, board rooms, and courtrooms).
Being DTC means significant additional layers of legal issues that must be successfully navigated. As one example, consider consumer data privacy and protection laws. Unlike many online businesses, DTC e-commerce businesses are collecting consumer data — if only payment, shipping, billing, and related data. All data of that type is now regulated and is becoming, increasingly, heavily regulated as more and more States enact various forms of data protection/privacy laws. Among other things, these laws regulate with whom you can share such data, to whom you can sell and transfer such data, and create a long list of consumer rights including the rights to know what data is collected, by whom, for what business purposes, to “be forgotten” (the right to have data deleted), and more. These statutes require consumer notices and consents which must comply with the statutes. In addition to other things, your DTC business now needs to formulate and write a company policy on consumer data retention and destruction. In addition to these general privacy protection statutes, DTC e-commerce businesses must comply with more specifically targeted statutes like the Children’s Online Privacy Protection Act.
Further, all of this data collection also triggers laws and statutes with respect to data cybersecurity. A leak, a hack, or an unauthorized access to sensitive consumer data will have an enormous impact on your DTC business.
Further, as a DTC business, since you are in control of social media and other digital direct marketing channels, your business is probably collecting a lot more data than you might otherwise think. Tracking software and targeted advertising are gaining increasing scrutiny from lawmakers and regulators.
Further, since a DTC business encompasses the range from manufacturing to delivery of the product, other statutory and regulatory regimes are implicated such as laws relating to packaging, labeling, and marketing. As an example, DTC e-commerce businesses must comply with regulations promulgated by the Federal Trade Commission. The statute involved — the Federal Trade Commission Act — prohibits false and/or deceptive advertising and business practices. This includes prohibiting false and misleading descriptions of products and other material facts, false claims, false/deceptive marketing, and more. Is your DTC e-commerce business using compensated social media influencers? If so, are your influencers disclosing the compensation and disclosing it prominently? If not, then your DTC business and your influencers may be running afoul of FTC regulations.
As another example, DTC e-commerce businesses must comply with regulations promulgated under the federal CAN-SPAM Act passed by Congress in the early 2000s. This act regulates email marketing. Among other things, marketing emails cannot contain false or deceptive headers or email subject lines, must be identified as marketing, must contain company location information, and have an easy-to-use opt-out or “unsubscribe-me” option.
These are just a few of the legal issues that are unique to DTC e-commerce businesses. There are, of course, an equal number of legal issues that face DTC e-commerce businesses that are not unique to the direct-to-consumer marketplace. These include:
- Protection of intellectual property
- Defending and prosecuting litigation (and threatened litigation)
- Responding to and defending against regulatory investigations
- Business-related legal issues such as business formations, contracts, labor law compliance, etc.
- Mergers and business acquisitions
- And more
Contact the DTC E-Commerce Attorneys at Revision Legal For more information, contact the experienced DTC E-Commerce Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.