Shopify is a service that offers templates and infrastructure for your business. As a business, you pay a monthly subscription and they provide you with website templates, payment services and other handy resources for running a business.
It can certainly make setting up a business much easier. However, as with any deal there are key responsibilities that you take on when you use their product that you must be aware of.
We run you through 7 things you need to know when you agree to use Shopify’s services.
Additionally, we’ll cover some key obligations under Australia Law that you should be aware of when using Shopify to start an ecommerce business.
Shopify is not a payment platform. They are instead the supplier of a service which involves giving you access to their ‘payments processor.’ The payment processor is the one who arranges for all administration of credit cards, debit cards and other types of payments when you sell your product using Shopifies service.
What Does This Mean For You?
The reason Shopify specifies that they do not provide the payment processing directly is to emphasize that they do not have responsibility for any mistakes, errors or mishaps involved in processing the payment.
Any dispute over the processing of a payment will be between yourself and the ‘payment processor’ – e.g. PayPal. That said, Shopify will use ‘commercially reasonable efforts’ to help you resolve any disputes over a payment service that may arise with a customer.
Using Shopify’s payment processing service incurs some legal obligations you must agree to.
When using the product you cannot:
- Allow third parties to use the payment service
- In anyway try to copy or profit from the payment service provided
- Use the payments service with the intention of creating a competing product
2. Shopify’s Privacy And Data Security Policy
Running an e-commerce business involves collecting people’s data and personal information. Australia has strict privacy and data protection laws which impose stringent obligations on the merchant if collecting personal data. However, Shopify also specifies their obligations and promises regarding data security and privacy.
Shopify does not guarantee that your data will never be accessed by a third party. However, they do note that any information regarding yourself or your customers stored on their servers will be protective to a reasonable extent. However, Shopify does not offer any protections for
information stored on your own website – they specify this is your responsibility.
3. What Can’t You Sell?
Shopify specifies certain products and services that cannot be sold using its payment services. They specify that the below list does not cover every possible prohibited business and they reserve the right to determine a prohibited business.
Prohibited business include:
- Investment, credit, money or legal services.
- Virtual currency service i.e. ethereum or bitcoin
- 18+ service or products i.e. pornography
- Unauthorised rip-off products
- Gambling services
- Any product or service that infringes on copyright or intellectual property law
- Illegal products i.e. drugs
- Anything sanctioned by a government or to a government that has been sanctioned.
- Money laundering services
- Drug paraphernalia
- Pyramid schemes
- High risk businesses, examples provided by Shopify include bankruptcy lawyers, computer technical support, psychic services, travel reservation services etc (full list available here)
- Sale of social media related services i.e. buying followers
Shopify specifies the user’s specific liabilities which they agree to when they use the product. Shopify states that if any of the below happens and someone brings a legal action against Shopify because of it, you agree to defend and compensate Shopify for any loss resulting from the action.
These actions include:
- Breach of the terms and conditions
- Any fees or fines that result from you incorrectly using the payment processing service.
- Any negligent or willful misconduct of anyone you are responsible for.
- Breach of contractual relationships between you and your customers.
- Any obligations to reimburse a third part that Shopify incurs as a result of your own acts or omissions.
Shopfy also specifies what they are not responsible for when you are using their product.
- Any damage incurred when you use their payment service
- Any advice they give is not binding and cannot be used against them
- The accuracy of the information they provide
- The timing of the payments, that the payment service will meet the requirements of your business or that the payment service will not at some time disconnect or not work.
- Loss of profit
- Loss of data
- Any damage incurred when using their payments services
- Personal injury or property damage
- Unauthorised server access
- Viruses your computer contracts while using their service
5. Responsibility For Third-Party Links
As an e-commerce business you will be likely to use third-party links on your website. These links can be used to provide more information or context or link another business of yours.
Shopify specifies that it is your responsibility to comply with the terms and conditions of these sites.
6. Changes To Your Business When Using The Shopify Service
If you are using Shopify and thinking about changing your product or services, business name, or how you accept payments you must notify Shopify and give them 30 days notice. If there are any changes to your financial situation which are negative i.e. you are going bankrupt, you must give Shopify three days notice.
7. Australian eCommerce Law
Shopify specifies that it operates out of Singapore and any disputes with Shopify will be held there. However, as an Australian business operating in Australia you must comply with Australian Law. Here’s a handy guide on the key legal areas to look out for as an e-commerce business.
Australian Consumer Law
Australian Consumer Law protects both business and customers from unfair, negligent or malicious business practices. It outlines your base obligations as a business. In this section we will run you through consumer guarantees and unfair business practices to avoid.
Consumer Guarantees apply automatically if you are offering a product or service in Australia. When selling a product or service you promise it will work, appear or function in a certain way. If your product does not live up to these promises you owe your consumers a refund, replacement or repair. Be aware of this when advertising your product or if a customer makes a complaint!
Unfair business practices come in many forms, Australian Consumer Law carries significant penalties for conducting a business in a way that is illegal. As was mentioned above, business such as pyramid schemes cannot be carried out using Shopify’s services. This is also prohibited under Australian Consumer Law.
Other unfair business practices include:
- Referral selling – when you promise added benefits if your customer gets their friends to buy your product.
- Offering unfair contract terms – when you use your power over the customer to force or trick them into signing an unfair contract in which you benefit far more.
- Unconscionable conduct – if you make a deal in unfair circumstances. For example, making a deal in English with someone who cannot speak English.
- Not supplying the product once paid for – once a customer pays for your product you must supply the product promised or supply a refund.
Australian privacy law is very strict. Not complying with Australian privacy law will mean significant penalties including fines.
Key obligations you have under Australian privacy law are:
- Obtain the consent of your customers to obtain their information
- You cannot use this information to ‘spam’ your customers or provide the information to third parties without consent.
Electronic Transactions Law
Electronic transactions law enables you to run your business completely online. The Australian government introduced legislation that made it legal to meet some of your legal obligations as a business electronically. This means providing materials, a signature or information in writing to the government or another party is a valid form of legal communication.
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