Although pursuing a career in drop-shipping seems to be a very attractive option, there are several potential legal issues that one must try to avoid at all costs if getting into the industry. To bring up some context for confused readers, Drop-shipping is a relatively new development that allows a goods sales store to feign availability of stock for a customer, leading to them making a purchase. After the purchase has been made, once the retailer knows the demand for the product he poses as a distributor for, he then purchases the same goods by the same amount of initial purchase at a price that is lower than the price that they sell it for. But the difference in price cannot be too big, as they have to be able to pick up customers that aren’t gullible enough to pay prices that are much more than what the product is actually worth.
As can be understood clearly from the definition, the business is quite ‘sketchy’ and leaves people wondering whether it is even legal to do what these drop-shipping professionals do. The answer is: it is legal if you do it the right way. However, there are several instances where such businessmen have received lawsuits due to their careless behavior.
This article acts as a comprehensive guide on how NOT to get sued. It is essentially to help newly started drop-shipping business avoid lawsuits in order to grow their business. Avoiding these lawsuits are essential because apart from attorney fees, settlement costs and court fines, the seller’s reputation also takes a huge hit due to the lack of trust from new customers after observing the fact that the sellers were hit with a lawsuit. Some legal traps one can fall into is listed below:
Several large companies such as ones that sell merchandise have trademarks that allow trade through only specific platforms. If an individual attempts to make money using the names of these companies or their trademark, they can be hit with a lawsuit due to copyright infringement which entitles the original company to the sole right to sell and distribute all items of a certain trademark.
Money Return Services:
Although there are no specific laws that mandate such a service, the issue arises when a mistake is made in an order and is not rectified by returning the amount paid. Such negligence can lead to a lawsuit for ‘false advertising’ that can lead to a large financial dent in your company’s assets.
These are two most common issues that you can face a lawsuit for. But, you can also face problems if your service is not as promised. For example, if you promise to deliver your product in 3-5 business but deliver in 10, the customer has the right to take you to court for failing to provide the promised service. Although the issues that arise from such a court case are minimal. It is best to avoid lawsuits altogether.
If these problems are all handled with care or avoided completely, you pave a path towards a successful drop-shipping business.