In the past decade or so billions of dollars in business have moved to the Internet in all verticals. Nowadays people do a lot of their shopping online, from books, air tickets, groceries to supplements or big ticket items such as cars. But they also have access to products that did not exist ten or fifteen years ago. Among them are Internet marketing products like info products, financial products like crude oil trading, gaming sites including for money, hosting services, online marketing and SEO, and many more.

The title of this article is the legality of Internet marketing generally speaking, in other words under what legal framework do these products fall, if any. As all these products are new and often without a real geographical constraint, there is no official regulatory body to oversee the activities of merchants and how they treat their customers. At the extreme there are scammers who are fleecing gullible clients who have no one to turn to when they realize they someone has profited from their naivety.

If we take the example of online gambling, this activity is not very well regulated, and it is even illegal to offer such products in some countries like the USA. But a few operators nevertheless thrive due to high demand for such entertainment.  The problem is that when a dispute arises between a player and a casino, the casino has pretty much full control over how to settle such dispute, possibly confiscating the player’s balance if they judge that he did not follow their terms of service.

This type of situation is prevalent not just in gaming but in most products involving a service or subscription.  If we take the example of Amazon this time, which is completely legal and allowed, they have a service where they let third party companies sell their products on the Amazon website. This is a win-win situation. Merchants benefit from a powerful infrastructure and distribution channel, while Amazon can test new products and diversify their offerings while collecting a lucrative fee.

The problem again is that if there is a dispute, which is generally initiated by Amazon, the merchant has nearly no recourse and is at the mercy of Jeff Bezos’ employees who just follow whatever internal guidelines they were given. An investigation can take months and may be due to a simple technical detail. Meanwhile the merchant’s payments are withheld and inventory is frozen in case they use Amazon fulfilment centers. Amazon has been known to even close some accounts without much explanation.

The two examples above do not even touch the issue of rogue operators and pure scammers, but they show that often it is the service providers that dominate and can impose their terms and methods of operations to their customers, including other businesses. There is no clear legal framework in many cases. For example in online casinos, it could be illegal to offer such games but as the operators are located in gambling friendly jurisdiction they have nothing to fear. Regarding amazon, complaints are directed to the Washington state Attorney General’s Office, but so far they have not taken any action.


Categories: Legal

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