CES Legal, Compliance & Privacy in Ecommerce 2 — Questions and Answers
Question 1: What does 'internet sales tax nexus' mean for US ecommerce merchants?
- A sufficient connection between the merchant and a state that triggers an obligation to collect and remit sales tax (Correct answer)
- The threshold of online sales above which federal income tax applies
- A tax exemption zone created for internet-based businesses
- The state where a merchant's domain name is registered for tax purposes
Correct answer: A sufficient connection between the merchant and a state that triggers an obligation to collect and remit sales tax
Following the South Dakota v. Wayfair Supreme Court ruling, merchants with economic nexus in a state (e.g., $100K in sales or 200 transactions) must collect and remit that state's sales tax.
Question 2: What is the purpose of ADA (Americans with Disabilities Act) compliance for ecommerce websites?
- To ensure websites are accessible to people with disabilities through features like screen reader compatibility (Correct answer)
- To require physical store accessibility for merchants with online and offline presence
- To mandate that ecommerce businesses hire a certain percentage of disabled employees
- To regulate the types of medical or mobility products that can be sold online
Correct answer: To ensure websites are accessible to people with disabilities through features like screen reader compatibility
ADA compliance for websites requires that digital content be accessible to users with disabilities, typically following WCAG guidelines, to avoid discrimination and legal liability.
Question 3: What are FTC endorsement guidelines primarily concerned with for ecommerce influencer marketing?
- Requiring clear disclosure when influencers are paid or receive products to promote a brand (Correct answer)
- Setting maximum commission rates for affiliate marketing programs
- Restricting which social media platforms can be used for product promotion
- Mandating that influencer posts include the product's full ingredient list
Correct answer: Requiring clear disclosure when influencers are paid or receive products to promote a brand
FTC endorsement guidelines require that paid partnerships, gifted products, and affiliate relationships be clearly and conspicuously disclosed to consumers in influencer content.
Question 4: What does COPPA (Children's Online Privacy Protection Act) require of ecommerce websites?
- Verifiable parental consent before collecting personal information from children under 13 (Correct answer)
- Age verification for all products that are restricted to adults
- Parental approval for any purchase made by a minor on the platform
- Separate pricing tiers for children's products versus adult products
Correct answer: Verifiable parental consent before collecting personal information from children under 13
COPPA applies to websites directed at children or knowingly collecting data from those under 13, requiring parental consent and strict data handling practices.
Question 5: What is the primary legal risk of using customer product reviews that contain misleading claims on an ecommerce site?
- FTC enforcement action for facilitating deceptive advertising and potential consumer lawsuits (Correct answer)
- Copyright infringement claims from the customers who wrote the reviews
- GDPR violations for displaying customer data without consent
- PCI DSS non-compliance for storing review metadata
Correct answer: FTC enforcement action for facilitating deceptive advertising and potential consumer lawsuits
The FTC holds merchants responsible for reviews displayed on their sites; allowing fake, incentivized without disclosure, or materially misleading reviews can trigger enforcement actions and fines.
Question 6: What is the purpose of a cookie consent banner on US and EU ecommerce websites?
- To obtain user consent for tracking cookies as required by privacy laws like GDPR and CCPA (Correct answer)
- To notify users that the website uses a secure connection
- To comply with payment card industry standards for session security
- To disclose the website's use of affiliate marketing links
Correct answer: To obtain user consent for tracking cookies as required by privacy laws like GDPR and CCPA
Cookie consent banners inform users about tracking technologies used on the site and, under GDPR and similar laws, obtain explicit consent before placing non-essential cookies.
CES Legal, Compliance & Privacy in Ecommerce 2
What does 'internet sales tax nexus' mean for US ecommerce merchants?