Disclaimer: This content is intended for informational and entertainment purposes. Please consult with a lawyer before making any legal decisions about your business.
If we’re honest, dropshipping is a pretty sweet gig. You don’t have to worry about stocking, shipping, or storing products. When you sell other people’s products as a dropshipper, you’re able to take a cut and let most of your business run on autopilot.
That sounds great, right?
Sometimes it sounds too good to be true, and that’s why so many people wonder if dropshipping is legal.
To set the record straight: yes, dropshipping is a legal, valid business model in pretty much every country in the world. It’s a beneficial way to get into the eCommerce game because:
While there are so many benefits to dropshipping, the legalities around it can get pretty complicated, especially if you’re selling to customers around the world. You need to structure your business correctly and follow dropshipping best practices to grow your business into something that’s both resilient and legitimate.
A little bit of planning and a call with your lawyer will set you on the right path. While you should always run an ethical business, you also need to stay on the right side of the law.
Learn why dropshipping can be risky from a legal standpoint and follow these 5 requirements to protect your business.
We love dropshipping, but like any business model, it isn’t without risk. If you’re considering jumping into dropshipping, you’ll face risk in several areas:
Dropshipping does have its flaws. If you want to protect yourself and your business in the long run, we highly recommend taking legal steps to legitimize your business.
If you aren’t sure where to start, consider these 5 dropshipping requirements to make your business legally legitimate. As always, make sure you talk to a lawyer before doing anything.
As a dropshipper, you’re almost entirely dependent on your supplier to store, ship, and fulfill every order. If you sign on with a low-quality or fake supplier, you’ll not only be out thousands of dollars, but you could even land yourself in hot water with the law.
If your supplier does something legally shady, you could be on the hook, too. For example, if the supplier is selling knockoff Disney merchandise that they assured you was real, you’re still on the hook. Even if you honestly believed the merchandise was legitimate and acted in good faith, you’re still liable.
That’s why you need to vet suppliers very carefully. This is one of the most important decisions you’ll make in your dropshipping business, so don’t choose a supplier without careful consideration.
Handshake agreements still happen, but they won’t protect you in the court of law. Get absolutely everyone involved in your business to sign a contract, including:
Hopefully, you’ll never need to use these contracts in court. But having contracts in place from the start can wrap you in a protective layer against lawsuits. Hire a lawyer to draft and review every contract that goes through your business. You want these contracts to be airtight so you’re actually protected if you’re taken to court.
You don’t have to get a business license to start dropshipping. You can just create your store and go.
But just because you can do that doesn’t mean you should. In the US, registering your business:
It’s pretty easy to set up an LLC if you’re in the United States. Look up the regulations specific to your country or province to file for the appropriate licenses.
There’s nothing worse than an unhappy customer—except for an unhappy customer who’s also litigious. You want to protect your dropshipping business from lawsuits as much as possible. A good way to do that would be to disclose information to shoppers, like:
If you’re in the US, you’re probably aware of the CAN-SPAM Act. This spells out how, exactly, businesses can contact customers via email and phone calls.
Every email your dropshipping business sends out needs to honor CAN-SPAM, as well as any other city or state requirements. That includes proving an existing relationship with your customer, honoring unsubscribes, and other simple but mandatory requirements.
Failure to follow email marketing laws can put your business at serious risk of a huge fine per email, so take this seriously.
Dropshipping is a legal way to earn a living. But like any eCommerce business, there are liability issues when you choose a dropshipping model. You can shield your business (and yourself) from liability by future-proofing your business with these 5 dropshipping legal requirements. Consult with a lawyer to make sure your operation isn’t violating any laws.
But we know legalities are just one side of the puzzle. When you want to grow your dropshipping operation to be streamlined and profitable, you need expertise on your side. Check out Spark Shipping to streamline tedious to-dos so you can focus on the mission-critical tasks in your business.