Conduct due diligence before running online transactions
Be careful before entering into transactions online to avoid losing money. PHOTO | FILE
A lot of business takes place today through the Internet. Some online businesses are registered and have physical locations while others are unregistered and do not have any physical locations.
A lot of transactions also take place through social media sites like Facebook and many times such businesses do not have any physical locations and neither are they registered under any form of business associations.
International trade too takes place through the Internet and social media. What then happens when such deals go wrong? For example, what happens when you order goods through a Facebook page and have paid for the same and no delivery takes place?
The first thing to do before trading online is to find out if a business is registered and if so, in which country. This makes it easier to file a recovery action against such a business.
If the business is registered, then in the event an online transaction goes wrong, recovery becomes easier. Such an online business can be sued in the country it is incorporated or where the main business is.
Some businesses have standard term contracts for any transaction that is carried out online. While the terms are mostly standard, it is important to go through them carefully as they could have an impact when it comes to recovery.
A few terms to look out for include the dispute resolution clause, which should state the manner in which disputes will be determined. Facebook, for example, has a clause stating that any disputes shall be heard in California.
When it comes to businesses without a physical address or that are unregistered, it becomes harder to recover damages and I would advise caution before entering into transactions. A bit of due diligence may be required before committing yourself.
The cyber world is largely unregulated due to complexities such as jurisdiction. For example, if you are conned in a fake business deal by somebody outside your jurisdiction, then how do you recover from them?
It is also important to establish the identity of the person you are dealing and if possible have an agreement in place.
In an online transaction I got into, I was dealing with a supplier, mostly on email. However, I insisted that we should have a properly signed agreement and requested the supplier to give me copies of his identification documents.
I drafted an agreement that included clauses such as dispute resolution and I made a few suggestions on the applicable law.
A lot of times people get into online transactions blindly and it becomes difficult to recover in the event of any losses.
