Is Dropshipping Legal?

Many people ask the question is dropshipping legal? The simple answer to this is yes. In this article, we look at the reasons why it is legal and how you can take advantage of the process to make a better business model for you that requires very little setup.

Is Dropshipping Legal?

Technically speaking dropshipping has been around for a very long time. Since the 1950s, when some homeware brands would release lists of the products that they were selling, clever businessmen would collate them and create their own catalogues that they would distribute to customers in their local area.

Customers would then place orders with the businessmen and they would order from the different brands and then send the orders to the customers.

Nowadays, it is easy to create something similar online. A website is replacing the catalog and instead of the seller collecting all the products and sending them to the customer, the merchant is sending the orders direct to the customer.

But is this legal? Yes. There is nothing in the law that said this cannot be done. It is just important to note that there are certain rules and laws that still apply to your dropshipping business. Here is a quick review of those laws.

Responsibility for Missing and Damaged Products

It should be noted that you are responsible for any missing or damaged products. You need to issue refunds or send out replacements as required. This can be troublesome but many dropshippers will automatically replace any damaged goods as long as there is proof that you can provide as to the damage of the product.

Therefore, ensure that you’re asking the customer to send in a video/photo of the damage.

Refunds

You are required to arrange all refunds of the products for customers who want to create a return. This is not the responsibility of the merchant. You can often claim a refund from the merchant if they receive the product back to their warehouse.

Tax Laws

The seller is the person who is selling the product and therefore, it is your local laws and regulations that you need to follow.

Marketing Laws

There are certain laws that you will need to follow in your local jurisdiction that you will need to follow. And if you sell internationally, you can also be expected to follow the laws of the country of the person making the order. For instance, there are some countries where certain products are prohibited. Therefore, you should block those products from being displayed.

If in doubt, speak to a local government official, trade body or legal expert who can help you find out the information that you want.

Registration

In addition, you might be required to register your business in your local area. Be sure to check with your local business hub as to what paperwork you need or whether you are not eligible to register.

Final Word: Is Dropshipping Legal

Is dropshipping legal? Yes, it is, but you still need to follow certain laws to stay legal. Ensure that you check with your local lawyers or trade bodies to ensure that you are staying legal.