Restricted Ecommerce Products That Will Get You in Trouble
As any retailer knows, some goods can be sold without any kind of special permit, but others can be sold only if you are licensed. Still others cannot be sold at all. With online marketplaces and self-serve ecommerce websites, often you might not even know that you are selling restricted ecommerce products. This is where waters get murky, and you should ensure that you are on the right side of the law.
Disclaimer: This article is written from a global perspective, and some of it might be applicable to one country and not another. The information here is intended to provide a general idea about restricted ecommerce goods and is not a substitute for professional advice. Please consult a competent professional before making any decisions about restricted or prohibited products.
The Goods You Sell May Not Be Restricted, But You Might Just Not Be Authorized to Sell
In almost all countries, businesses need to have some kind of a certification or registration. In some cases, you may also need to be compliant with labor laws, environmental regulations, and be faced with stringent disclosure norms. Also, based on your form of incorporation, you may need to make additional filings and compliances. You can be a retailer only when you are fully compliant. In most territories, the regulatory environment for online businesses is different from that of offline businesses.
You May Be Authorized to Sell in General, But Not These Specific Goods
So, you are a fully compliant business with identifying names, tax codes, and other registration numbers? Congrats! That still doesn't mean that you can sell all goods. Here is a list of goods that you might not have the permission to sell:
Sale of alcohol is controlled in almost all countries. Some might take a lenient view of beer and wine specifically, but most will not allow sale of stronger alcoholic beverages without the necessary licensing. Several countries have a blanket ban on selling alcohol online.
If it is easy to see why liquor is a restricted product, it is easier to understand why guns and other forms of weaponry are illegal to sell online. In fact, there are very few forms of weapons that are permitted for retail sale in any country. And these too require licenses to sell as well as buy. If you run a virtual marketplace, do not accidentally allow sellers to sell weapons online, otherwise, you will find it very difficult to defend yourself in the court of law.
Liquor and weapons are easy to understand. Pharmaceutical products can be equally dangerous if not used carefully. As a result, most countries have stringent regulation around retailing of medicines. As if that's not enough, there are usually several categories of medicines, each with its own licensing requirements. In several countries selling medicines online is not allowed, period. That's because administrations worry that it is very difficult to implement regulations associated with prescriptions and patient identification.
Ecommerce advocates argue that digital platforms are better placed for securely capturing customer data, as compared to the corner pharmacy.
This might seem like a strange addition to this list. In fact, there are several kinds of food that can be sold without licensing. But most territories have explicit guidelines on markings and labeling on food packaging. For instance, all food needs to mention manufacture date, and more specifically, expiry date. In some cases, when food is fresh or cooked, there might be additional restrictions on how it needs to be handled. There are also several other regulations around selling food. For instance, an ecommerce business cannot individually sell packages that are not designed for individual sale.
You May Have Clearance to Sell Specific Goods, But There Might Be Territorial Restrictions
Often, something might not be specifically restricted as long as you sell it in a specific territory. But it might actually be prohibited, or require special permissions to sell in other locations. Obvious examples that come to mind relate to fresh food and seeds as these could interfere with the agriculture of a particular land. Also, there could be items of national interest that may not be legal to sell in certain countries. For example, in the 90's the US government made it illegal to export 128-bit encryption software, as it feared that would make it very difficult for American surveillance agencies to break into secure systems.
Of course, that did not stop international software companies from developing their own 128-bit encryption software and selling it in their respective domestic markets.
The idea here is that several products come with their own territorial restrictions. There was a time when I published books. I would buy reprint rights for famous titles from publishers in other countries. Naturally, the original copyright owners did not want me cannibalizing sales in their primary markets. So, my deal with them was that I would only sell in certain territories for which they were granting me reprint rights. Such arrangements are not uncommon for products that have significant intellectual property associated with them.
And this intellectual property is not restricted to copyrights. It includes brands, trademarks, and patents.
You May Be Authorized to Sell All Goods That Can Be Sold, But Not Goods That Are Illegal
Some goods are simply illegal to sell. Other than some of the examples alluded to earlier; this would include the sale of narcotic drugs in most countries. Laws and sensibilities around the globe vary. As a result, the list of prohibited goods varies. In some countries selling sex toys of any kind would be illegal. In others, it would be illegal to sell meats of certain animals. In still others, there would be issues around selling goods that are seen as immoral. Local health concerns also make some products illegal in some territories.
And Then Some of it Will Sound Just Plain Crazy
We were surprised to note that the sale of toy guns is illegal in many cross-border ecommerce situations. We can only speculate that these guns must trigger some security concerns every time they are detected in a scanning system. After all, who is to say what is a real gun vs. a toy gun. And toy guns are not the only items on this crazy list. Selling antiques from several countries is often seen as plundering that country's national heritage and is often prohibited.
Here are some goods that are either prohibited or restricted in some countries. Some items in this list will make you wonder.
- Beauty products
- Certain tableware
- Glazed pottery
- Playing cards
- Straw hats
- Woven fabrics
You have heard of "hoverboards," right? When they were first introduced, they sold like hot cakes. Later their sale and purchase was restricted in some territories owing to security concerns.
If you are an online retailer, you need to know that you are responsible to be in compliance with regulations in each territory that you operate in.
While most people have an intuitive idea of the laws in the country that they grew up in, cross-border ecommerce is a completely different ball game. And that's where most problems arise. Soon you find out that the customs department of another country has confiscated your goods, and a lawsuit has been filed against you in a local court there. In cross-border ecommerce, you have to be careful about both: what your country prohibits exporting, as well as what the target country bans importing. You must also be cautious about what your returns policy permits to be returned.
Don't restrict yourself to commonly available lists of prohibited goods. In addition to such lists, you need to use your judgment and discretion in deciding what you want to sell online. There was a time when ecommerce websites started selling marijuana, and sales really shot up. But these websites were walking on thin ice and had to repeatedly face consequences.
And the List Continues
If you export of these items, you want to ensure that your country and the buyer's country permit the sale. The fact that some of these products might seem harmless to you will not save you from getting prosecuted. In fact, it would be a good idea if you were to find out about any issues with selling products right at the point when you might be considering sending samples abroad. Technically, sending samples doesn't constitute a sale, but it could still be construed a restricted business transaction.
- Adult products
- Damaged batteries
- Dietary supplements
- Fire extinguishers
- Gambling devices
- Gas masks
- Human growth hormone (HGH)
- Lab reagents
- Live plants
- Lockpicking devices
- Medical devices
- Medical specimens
- Military uniforms
- Night vision devices
- Poisonous substances
- Police shields
- Radioactive products
- Rough diamonds
- Sharp objects
- Skin of certain reptiles
- Sky lanterns
- Tear gas
The Bottom Line
Doing business was not meant to be easy. But the information here should not discourage you from ecommerce in general, or cross-border ecommerce in specific. There are thousands of ecommerce businesses, big and small, that are successfully selling millions of products, cumulatively, every day. The idea here is to merely remain compliant with laws, regulations, and guidelines.
- Restricted products are those that are legal to sell, but need permissions or licenses.
- Prohibited products are those that you are just not allowed to sell.