Chia Ling Koh, Managing Director at OC Queen Street LLC and a seasoned Digital Business lawyer with expertise in AI (MTech KE) and Cyber Security (CISSP), shares with us on the common legal struggles e-commerce owners may face, what to prioritise and how you can protect your business.
Considerations for Digital Marketplace Owners
As digital marketplaces are a rather established form of technological usage, Chia Ling shares that “many considerations and issues are not new, but would recur every now and then.”
Some general considerations across countries and their legalities would be:
Selling Regulated Products and Services
Intellectual Property (IP), IP Violations and Data Protection
IP Violations: If an IP owner says a particular content on your marketplace is infringing, you need to have a process to handle that complaint. You need to monitor and cross-refer your content to other sites to check for IP violations, but you also need legal consultancy.
Some examples of typical protocols and processes for IP and data protection would be having certain rules about handling IP violation complaints, or a takedown notice procedure on your site. You also need certain Terms and Conditions of Use to try and handle IP violations and reduce the chances of it occurring.
Data Handling: Data is constantly transmitted, stored and collected on the platform. Thus, owners and service providers need to closely monitor for possible breaches into the system. If there are breaches, clear procedures, protocols and system processes need to be in place to handle such situations and ensure privacy. Though you need to remember that no system is completely foolproof and secure, so keep this in mind when deciding data privacy protocols and strategies.
Cyber security is very closely related to data privacy, but they are two different things. Data Privacy is the protection of personal data, while Cyber Security protects much more than just personal data. It also involves the handling of confidential data and other types of data. As such, Cyber Security is a means of protecting all of your data, and ensuring it is not leaked due to lapses from you or service providers.
If you are relying on a service provider to host or create your marketplace site, it would be best to find out what is the arrangement the service provider has. Look into how the data is going to be handled and where it would be stored, if there are any service level commitments or security commitments.
When it comes to payments, the payment system is an essential function in marketplaces. Yet, marketplace creators and users need to be mindful of the payment system you have in place, as the rules governing payment types are getting increasingly sophisticated. Depending on your payment system set up, it may attract more regulations and imposements.
Heavily Regulated Payment Methods: Such would be when the marketplace permits issuing of e-currency to purchase items, the setting up of a digital payment wallet, and many others. Due to the uncertainty of the various payment methods currently out there, the rules governing these them are unclear at the moment, and users need to constantly be updated on the latest rules in order to establish a proper payment system.
Selling Regulated Products and Services
This would be the selling of products such as financial or insurance products and legal or professional services. As the nature of regulations and restrictions in countries regarding such goods and services are stringent, the marketplaces that offer these potentially attract more rules, and any arrangement with the seller and the host should be reviewed, as often the arrangements are not so typical by the nature of the products.
For example, Singaporean lawyers are not allowed to share fees, and any arrangement with a marketplace owner needs to take these sorts of prohibition into account.
Staying Updated in the Legalities of Digital Marketplaces
There may be sites that contain some basic information about the laws in relation with digital marketplaces, but in terms of addressing the concerns of those who seek to run and are already running a marketplace business, Mr Koh advises this group to seek legal and professional advice and consultants.
Prioritising Digital Marketplaces’ Legal Considerations
In designing marketplace spaces, you should start with the basics. To help avoid major legal pitfalls and scrutinise the legal clearances of your marketplace, you should get a lawyer to go through the legal documentation.
Mr Koh advises the reviewing of your legal documentation in 3 stages. The first is before you go live; secondly, whenever there is a new product or feature you wish to release; and the third is to have your legal documentation and the country’s legal requirements be periodically reviewed. A tip to handle the last stage is to get yourself on the mailing list of a lawyer or legal consultant that updates you on the digital laws and regulations every few months or so.
Marketplace hosts need to make your Terms and Conditions of Use and other Policies clear and obvious to your users, be it sellers or buyers. There are several ways to go about doing this.
Have the Terms and Conditions in Clear and Concise Language: Your T&C needs to be as clear as can be and brought to the attention of your users.
Watch the entire Arcadier Inspire Summit talk by Chia-Ling Koh here