Assessing Legal Challenges for E-Commerce Retailers in 2025

As a lawyer and entrepreneur, I’m fascinated by the legal and business landscape for e-commerce retailers. Amid the opportunities technology continues to open for the industry, legal challenges abound, especially around privacy laws, the lawsuits they spawn, and how retailers can best avoid or prepare for them.

The first thing to know is that any retailer doing business over the internet is a data company. That means it collects information about customers, vendors and partners and is, therefore, subject to a host of laws and regulations surrounding data privacy. Accordingly, retailers should implement robust data protection measures and be prepared for potential data breaches. Those can lead to fines from government agencies such as the Federal Trade Commission or class-action lawsuits involving people whose data was exposed during the breach.

Data privacy is also involved in another level of legal problems — legislatures haven't passed laws to keep up with business technology. This sluggishness has opened the door for plaintiffs’ attorneys to reinterpret antiquated laws.

For example, the federal Video Privacy Protection Act (VPPA) was passed in the 1980s to prevent pre-internet brick-and-mortar video rental stores from disclosing customers’ videotape rental records. Today, however, the VPPA is the basis for lawsuits claiming that web tracking tools, like pixels, violate customers’ privacy.

Another old law, the 1990s-era Telephone Consumer Protection Act (TCPA), was originally passed to curb telemarketing and is now applied to junk faxes and text message marketing. It's the subject of myriad class action cases, including one that the U.S. Supreme Court will hear this term.

E-commerce companies can take actions to minimize class action risks, such as adjusting their websites’ terms of use, adding new disclosures, and making opt-ins more explicit for any marketing outreach to mobile devices. Those measures will help if — or when — a privacy case is brought, and defendant companies can show that users were warned of tracking and had a chance to opt out or that they were notified and opted into text message marketing.

Because the odds of sizeable companies facing claims about privacy or other issues are relatively high, they should consider including in their terms of use what forum will handle any disputes between the company and its customers. These terms could define a specific court for bet-the-company cases and an alternative dispute resolution (ADR) provider to handle routine matters through arbitration.

In recent years, plaintiffs’ attorneys have organized “mass arbitrations” — i.e., hundreds or thousands of claims made to a company’s ADR provider — to get around class action prohibitions consumers agreed to by signing their terms of use. This tactic can give plaintiffs significant leverage to force a settlement given how companies generally absorb most of the cost of traditional arbitration. E-commerce retailers should consider finding an ADR provider with a process for handling mass arbitrations efficiently while maintaining the individual nature of each case.

Beyond Privacy

E-commerce companies must also navigate a host of other legal obstacles. Intellectual property issues require retailers to secure proper licenses for using trademarked and copyrighted content, such as sports team logos. Owners of these rights are vigilant in protecting their brands and aren’t shy about suing alleged infringers. These cases not only allow them to collect damages, but they also warn others to steer clear of their protected intellectual property.

The tax front also remains complex as companies must determine whether they owe sales tax in each of the 50 states where they sell or deliver products. International e-commerce introduces additional tax regulatory challenges.

Finally, remote work could complicate compliance with state-specific labor laws and regulations, especially as companies adopt hybrid office models.

The future is bright for e-commerce retailers, especially if they work with their attorneys to minimize legal risks.

Rich Lee is CEO and co-founder of New Era ADR, a fast-growing technology company and alternative dispute resolution forum.