The Simple Guide to E-commerce Compliance: USA & Europe

A 2 minute read to understand compliance needs, risks and sanctions for stores selling to customers in USA and Europe.

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🇺🇸 United States Federal Requirements

1. PCI DSS (Payment Card Industry Data Security Standard)

What it is: Security standards for any business that processes, stores, or transmits credit card information.

Basic Steps to Comply:

• Use a PCI-compliant payment processor (Stripe, Square, PayPal)
• Never store full credit card numbers on your servers
• Implement SSL certificates on all payment pages
• Conduct quarterly vulnerability scans
• Complete annual Self-Assessment Questionnaire (SAQ)

Sanctions & Risks:

• Fines: $5,000-$100,000 per month of non-compliance
• Card brand penalties: $50-$90 per compromised record
• Loss of ability to process credit cards
• Lawsuits from affected customers

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2. FTC Act Section 5 (Fair Trade Practices)

What it is: Prohibits deceptive or unfair business practices.

Basic Steps to Comply:

• Create clear, honest product descriptions
• Display total costs (including shipping) before checkout
• Honor advertised prices and delivery times
• Implement clear return/refund policies
• Avoid misleading marketing claims

Sanctions & Risks:

• Civil penalties up to $51,744 per violation
• Injunctive relief requiring business changes
• Consumer restitution requirements
• Negative publicity and reputation damage

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3. CAN-SPAM Act

What it is: Regulations for commercial email marketing.

Basic Steps to Comply:

• Include clear "unsubscribe" links in all emails
• Honor opt-out requests within 10 business days
• Use truthful subject lines and sender information
• Include your physical business address
• Don't use deceptive headers or misleading content

Sanctions & Risks:

• Fines up to $51,744 per email violation
• Criminal penalties for egregious violations
• ISP blocking of your email domain
• Damage to email deliverability rates

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🇺🇸 State-Level Requirements

4. Sales Tax Collection

What it is: Obligation to collect and remit sales tax in states where you have "nexus."

Basic Steps to Comply:

• Register for sales tax permits in relevant states
• Calculate nexus thresholds ($100K-$500K in sales typically)
• Use automated tax calculation software (Avalara, TaxJar)
• File regular sales tax returns
• Maintain detailed transaction records

Sanctions & Risks:

• Back taxes owed plus penalties (5-25% of tax owed, depending on State)
• Interest charges on unpaid amounts
• Business license revocation
• Personal liability for business owners

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5. State Privacy Laws (CCPA, CPRA, etc.)

What it is: California and other states require specific data privacy protections.

Basic Steps to Comply:

• Create comprehensive privacy policies
• Implement "Do Not Sell My Info" mechanisms
• Establish data deletion procedures
• Train staff on privacy rights handling
• Maintain data processing records

Sanctions & Risks:

• CCPA fines: $2,500-$7,500 per violation
• Class action lawsuits ($100-$750 per consumer)
• Regulatory investigations
• Mandatory compliance audits

🇪🇺 European Union Requirements

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6. GDPR (General Data Protection Regulation)

What it is: Comprehensive data protection law affecting any business serving EU customers.

Basic Steps to Comply:

• Obtain explicit consent for data collection
• Implement "right to be forgotten" procedures
• Conduct Data Protection Impact Assessments
• Appoint EU representative if required
• Report data breaches within 72 hours

Sanctions & Risks:

• Fines up to €20 million or 4% of global annual revenue
• Criminal penalties in some EU countries
• Business operations suspension
• Massive reputation damage

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7. Digital Services Act (DSA)

What it is: New EU rules for online platforms and digital services.

Basic Steps to Comply:

• Implement content moderation systems
• Provide clear terms of service
• Establish complaint handling procedures
• Conduct risk assessments for illegal content
• Report on content moderation activities

Sanctions & Risks:

• Fines up to 6% of global annual turnover
• Periodic penalty payments
• Business suspension in EU
• Mandatory external audits

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8. VAT (Value Added Tax)

What it is: EU tax on goods and services sold to European customers.

Basic Steps to Comply:

• Register for VAT in relevant EU countries
• Use VAT calculation software
• Issue compliant VAT invoices
• File regular VAT returns
• Maintain transaction records for 10+ years

Sanctions & Risks:

• VAT owed plus penalties (up to 100% of tax)
• Criminal prosecution for tax evasion
• Asset seizure by tax authorities
• Business closure in extreme cases

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9. Product Safety & CE Marking

What it is: EU requirements for product safety and conformity.

Basic Steps to Comply:

• Ensure products meet EU safety standards
• Obtain required certifications and testing
• Apply CE marking where required
• Maintain technical documentation
• Implement product recall procedures

Sanctions & Risks:

• Product recalls and market withdrawal
• Fines up to €100,000+ per violation (varies depending on EU member state)
• Criminal liability for unsafe products
• Import/export restrictions

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⚡ Quick Action Checklist

Start Here (Priority 1):

• [ ] Implement PCI-compliant payment processing
• [ ] Create GDPR-compliant privacy policy
• [ ] Set up sales tax automation
• [ ] Establish clear terms of service

Next Steps (Priority 2):

• [ ] Register for required business licenses
• [ ] Implement email marketing compliance
• [ ] Conduct security vulnerability assessment
• [ ] Create data breach response plan

Ongoing (Priority 3):

• [ ] Monitor compliance requirements changes
• [ ] Conduct quarterly compliance reviews
• [ ] Train staff on compliance procedures
• [ ] Maintain detailed compliance documentation

💡 Pro Tip: The cost of compliance is always less than the cost of violations. Start with the basics, then build comprehensive systems as you grow.

Need help navigating these requirements? A cybersecurity audit can identify your specific compliance gaps before they become expensive problems. Here’s a link to a short presentation about the Netmidas Ecommerce Audit.

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