The Beginner’s Guide to eCommerce Security and Compliance

Tania Voss

Independent External Contributor

August 20, 2020


Protect your business from fraud, scams, and disputes. Learn the importance of security, and how to process your eCommerce compliances in this article.

Without a doubt, online payments give businesses a huge way to scale. But this much freedom also brings opportunities for criminals to exploit. Data theft and scams can be damaging to both seller and buyer. The repercussions could even last long after the business goes bust.

To avoid the risks, every business owner must meet mandatory cybersecurity compliance. eCommerce security should be a priority, no matter the type of business.

There are different kinds of eCommerce models in the market:

  1. Business to Consumer (B2C) - the business sells the product directly to an individual customer.
  2. Business to Business (B2B) - for businesses selling goods to other businesses.
  3. Consumer to Consumer (C2C) - for consumers selling or trading goods to other consumers. Examples of this are online trading, auction (eBay), and classified ads (Craigslist).
  4. Consumer to Business (C2B) - for consumers selling their service to other businesses. The most popular C2B example to date, are influencers. 

Why Do eCommerce Businesses Need Compliance?

With all the ways that criminals can infiltrate personal data, laws are set and constantly updated to protect businesses and consumers. Adhering to these rules and getting respective licenses is called compliance.

The compliance process is according to must industry standards and the local government mandated regulations. In this process, the business will need to check their local policies, as well as international laws under its coverage.

The rise of fraudulent activities during this pandemic made it all the more important for eCommerce businesses to comply. Not only to obtain the licenses, but to strictly follow the security guidelines that comes with them.

Compliance not only protects the company from huge losses, it also protects its customers from fraud and disputes. Consumer confidence leads to customer loyalty. This trust, when consistently maintained, leads to bigger growth in sales. 

In fact, a recent study from Checkout.com shows that customers are willing to pay more for security over convenience. “In a stringent Willingness-to-Pay analysis, the economists working on the report were able to find that consumers will pay $4.13 on average for the security of two-factor authentication.

French consumers were most security-conscious, valuing two-factor at €4.95, followed by the UK (£3.99), Germany (€3.10) and the US ($3.17).”

The study also found a huge disconnect between merchants and customers: they find security to be the least important when it comes to payments. 

Importance of eCommerce Security

How do we go about this disparity? For merchants to prioritize cybersecurity, Payment Service Providers (PSPs) should step in as their main source of cybersecurity information and best practices. Expert advice is needed, as getting the right compliance license and risk management tools vary for every business. 

To get started, merchants can start with these laws and regulations established to protect both seller and buyer:

  • Sarbanes-Oxley (SOX) Act of 2002 - also known as the Corporate Responsibility Act of 2002 was passed on July 30th of the stated year to protect investors from fraudulent or erroneous financial reporting from companies. It also demanded strict reforms in terms of security and new penalties for offenders.

This law demands companies to store and retain business records digitally to protect investor’s information and accurate records.

  • Health Insurance Portability and Accountability Act of 1996 (HIPAA) - a federal law designed to protect the private patient information from being publicly released without their consent or knowledge. This lets patients have full control over their health information that is usually needed for healthcare and other businesses.
  • CAN-SPAM Act of 2003 - also known as Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act is a law that poses as a regulation for spam emails. This requires businesses to provide a legitimate return address, provides an option to customers to stop sending messages once demanded, and provide real information in the content.
  • Federal Information Security Management Act (FISMA) - is a federal law made to create and implement data protection and security program. It is also a big part of the E-Government Act of 2002 established for the management of government services and processes.
  • Dodd-Frank Wall Street Reform and Consumer Protection Act - this was passed during the Obama administration as a solution during the financial crisis of 2008. It’s made to reduce the possible dependency of customers on banks by subjecting banks to transparency and accountability. It also allows liquidations or restructurings through the Orderly Liquidation Fund.
  • Payment Card Industry Data Security Standard (PCI DSS) - this is an information security standard regulated by card networks Visa, Mastercard, American Express, and JCB, administered by the Payment Card Industry Security Standards Council. This is to ensure the security of credit card transactions and information.

Note that compliance rules and regulations differ from each country. For instance, there’s Germany's Deutscher Corporate Governance Kodex as well as Australia's Corporate Law Economic Reform Program Act 2004.

Depending on your business industry and location, you will need to coordinate with the right payment service provider to complete your compliance certificates.

What Are the Most Common Compliance Certifications Needed for Businesses?

If you’re to get into eCommerce, here is the list of certifications you need to get for a secure and legitimate eCommerce business.

  • PCI DSS (Payment Card Industry Data Security Standard)
  • FedRAMP (Federal Risk and Authorization Management Program)
  • ISO/IEC (International Organization for Standardization/International Electrotechnical Commission) 27001
  • PA-DSS (Payment Application Data Security Standard)
  • CMMI (Capability Maturity Model Integration)
  • SOC 2 (Service Organization Control 2)
  • IS Audit (Information Systems Audit)
  • GDPR (General Data Protection Regulation)

Your payment service provider knows which compliance certificates apply to your business. They should help educate and inform you of data security best practices and how to treat it as top-priority.

Areas to Focus on in Terms of Compliance

If you want to stand out from other eCommerce businesses, don’t just focus on user experience optimization. Leverage on your data security offerings, too. Remember, consumer confidence boosts sales.

Below are the information and features you need to have for your site:

  • Prioritize data protection. This is a must especially if you require personal information from your clients - which is a common standard for nowadays to process a transaction. The current GDPR set up has been designed to impose heavier fines on companies for non-compliances. It’s also a must for companies to inform clients that the information collected is only meant for processing and must never be used outside for other purposes.
  • User-friendly interface and features. When placing an order, the buyer should be able to correct their information and order before pushing through. There should also be a confirmation page that finalizes the order as well. Ensure that there will be a receipt and record sent through email to confirm the services or product purchase. 
  • Information is important. There should be a detailed description of the product, your company name, valid address, email address, and corporate registration. There should be a clear disclosure of the cost breakdown and possible taxes and shipping. Provide your preferred methods of payment as well on your page.

Compliance is not as hard as it seems. Everything should be easy when you outsource your compliance with industry experts. Leave us a message via info@altpaynet.com.

Sources:

  • https://www.investopedia.com/terms/s/sarbanesoxleyact.asp
  • https://www.shopify.com/encyclopedia/what-is-ecommerce
  • https://searchdatamanagement.techtarget.com/definition/compliance
  • https://www.cdc.gov/phlp/publications/topic/hipaa.html
  • https://www.law.cornell.edu/wex/inbox/what_is_can-spam
  • https://digitalguardian.com/blog/what-fisma-compliance-fisma-definition-requirements-penalties-and-more
  • https://www.investopedia.com/terms/d/dodd-frank-financial-regulatory-reform-bill.asp
  • https://en.wikipedia.org/wiki/Payment_Card_Industry_Data_Security_Standard
  • https://www.instagram.com/p/CC8mobeJQWT/
  • https://synchlaw.se/navigating-e-commerce-rules-and-regulations-5-areas-to-focus-on-for-compliance/





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