Since you’re reading this post, here’s guessing you’re ready to jump into the wild world of selling digital products online. Maybe you’ve got a groundbreaking course, a set of gorgeous digital art files, or a new approach that you know will “change everything.”
Cool. But before you hit publish, you need to know this: the digital marketplace may be exciting, but it’s also a legal minefield.
Don’t panic. The legal stuff doesn’t have to be painful. In this post, I’ll help you spot six legal ideas that every digital business owner needs to know… and I’ll keep this painless. No legalese, no eye-glazing lectures. Just the good stuff you actually need so you can sell with confidence (and without surprise nasty-grams from lawyers).
Your digital product is your baby. Not to state the obvious here, but digital products are different from physical products. Your customers aren’t buying a thing; they’re buying information.
That makes it easier for you to create your product without having to sell a kidney to get startup capital to buy inventory, but it also means it’s way easier for bad actors to rip you off. A lot of online business owners seem to understand this is a big risk because the most common question I get asked is: “How do I prevent someone from stealing my content?”
While I can’t give you a sure-fire way to prevent someone from stealing yourself, intellectual property rights are your best bet.
Copyright law automatically protects all the content you create… whether it’s a blog post, podcast, downloadable pdf, course, or just about anything else. If you create it, you own it the second it is in fixed form (which basically means the moment it exists!).
While you get copyright protection automatically, you need to register that copyright if you ever want to actually enforce the dang thing. As weird as it sounds, people are prohibited from ripping you off no matter what, but you can’t do anything about it unless you have a registered copyright.
Luckily, registering a copyright is a simple, painless process. Head over to the US Copyright Office’s website to get the information you need and to file the paperwork.
But understanding IP law isn’t just about protecting your stuff; it’s also about making sure you don’t step get yourself into legal hot water.
Remember that “automatic” protection thing? Well, that applies to everyone else’s content too! In other words, you have to be careful about how you source the material you use to build your online business.
Are you using music, images, or text created by someone else in your digital products? Make sure you have the right permissions or licenses to do so. It’s all part of playing fair in the digital playground.
TIP: Most stock creative resources (like Unsplash, Pixabay, and Pexels) have their licensing information accessible and clear. If you use places like iStockPhoto and Canva, make sure you research the license for the specific asset you want to use. And NEVER EVER pull a creative asset off of Google and pop it into your product. If you’re caught, it’ll cost you BIG.
When it comes to your content, create it, license it, or buy it. Otherwise, the “free” file you dropped into your product could end up being the most expensive mistake you make.
While online marketing can sometimes feel like the wild west, online business doesn’t mean “lawless frontier.” There are some rules you still have to follow… and taxes are a biggie.
Not to sound like a crotchety old man, but doing business online used to be way better. When I first moved my business online, you basically didn’t have to worry about sales taxes. See, back then, you couldn’t be required to collect sales taxes for sales except in states where you had a physical presence. In other words, you had to figure out sales tax where you lived… and nowhere else!
Then the Supreme Court went and screwed it all up for us in 2018 when it decided that states where you don’t have any physical presence could require you to collect sales taxes so long as you have a “nexus” to the state. Not wanting to miss out on moolah, most states have now passed laws establishing nexus requirements.
The good news is that thresholds for these nexus requirements tend to be large (i.e., $100,000 in sales in that state). Not to be glib, but here’s hoping we all have to pay sales taxes in EVERY state!
The good news is that there are tools around to help you figure all of this out. We recommend TaxJar as a standalone resource, but payment processors (aka Stripe) tend to have features to help you deal with the tax issues.
When you're selling digital products and collecting customer information, it's vital to prioritize privacy.
First, you are almost certainly legally required to think about privacy. Between the California Online Privacy Protection Act (CalOPPA) and the European General Data Protection Regulation (GDPR), businesses that collect any personally identifiable information are required to tell visitors what information they collect, what they use it for, and who they share it with.
TIP: If you're unsure where to start with creating a privacy policy that covers all the necessary bases, Plainly Legal™ can help. With our easy-to-use Legal Doc Generator, you can create a customized privacy policy tailored to your specific business needs that complies with the major privacy regulations. (And it’s built with clauses drafted by an actual lawyer! #winning)
Second, focusing on privacy can build trust with your audience. Let’s be real… people care about their privacy. While most customers won’t be inspecting your privacy policy, they do care about knowing that you value their privacy.
Bottom line: Don’t skimp on privacy. Make it part of your business strategy.
If you are selling digital products, you need terms and conditions. That goes for downloadable templates, courses, memberships, and any other product.
Think of terms and conditions like the “rule of the house” sign at your grandma’s. Only instead of “wipe your feet,” you’re setting rules about refunds, usage rights, and liability.
Make sure your terms cover:
While creating terms might seem nitpicky, clearly outlining these terms lets you set expectations for your customers and prevent any disputes.
Crafting terms and conditions can be complex. Luckily, our founder thought of that too when he set out to make Plainly Legal™. We’ve built terms and conditions documents for digital products right into our Legal Doc Generator, which makes it super easy for you to create customized terms and conditions that align with your specific business needs.
When it comes to getting paid, your choice of payment processor matters—a lot. It’s not just about swiping a credit card; it’s about protecting your business, your customers, and your sanity.
Start by looking at the big names: Stripe, PayPal, and Square. Each one has different strengths. Stripe is flexible and integrates with just about everything. PayPal is recognizable and trusted by buyers worldwide. Square is simple and straightforward. The “right” one for you depends on your business model, your customer base, and how tech-savvy you want to get.
But here’s the kicker… once you choose a processor, you have to follow their rules. Every platform has terms of service, acceptable use policies, and chargeback procedures. Ignore them, and you could find your account frozen faster than you can say “cart abandoned.”
👉 Example: Selling something that’s restricted (like health claims without disclaimers)? PayPal might shut you down. Stripe has rules about prohibited products, too. If you’re not clear on them, you’re playing roulette with your revenue.
So before you click “sign up,” do a little due diligence:
The bottom line: choosing the right payment processor is only half the battle. Playing by their rules is what keeps your money flowing without hiccups.
Marketing is the engine that sells your digital products. But here’s the thing… it’s not just about clever copy and slick graphics; you’ve also got to keep it legal. Otherwise, you risk turning your “genius funnel” into Exhibit A in an FTC enforcement action.
First, honesty is non-negotiable. You can and should highlight the benefits of your product, but don’t promise it’ll do things it can’t. If your online course helps people write better copy, don’t claim it’ll make them a millionaire overnight. Overselling is not just bad business; it’s a one-way ticket to refund requests, bad reviews, and potentially some very unfriendly regulator attention.
Second, disclosures matter. If you use testimonials, sponsored posts, or affiliate links, you’ve got to be upfront about it. The FTC requires “clear and conspicuous” disclosures, which basically means your customer should understand what’s going on without needing a magnifying glass or a law degree. “#ad” buried in a sea of hashtags doesn’t cut it.
Third, don’t forget about free offers and guarantees. If you’re promising “lifetime access” to a product, you’d better define what “lifetime” means (spoiler: it’s usually the life of your business, not until the customer’s great-grandkids are born). The more transparent you are, the fewer angry emails you’ll get down the line.
👉 The takeaway: market boldly, but do it with integrity and transparency. When your customers know you’re playing it straight, they’ll trust you more, buy more, and stick around longer. Plus, you won’t wake up one morning to find a sternly worded FTC letter in your inbox. Win-win.
Selling digital products can be an amazing way to scale your business. But skipping the legal basics? That’s just asking for headaches.
Cover your bases with IP protection, privacy policies, terms, and proper payment/tax systems, and you’ll build not only a business but a business that lasts.
👉 Want to make the legal side ridiculously easy? Check out Plainly Legal™’s Legal Doc Generator. It’s the fast, affordable way to get the documents you need without hiring a lawyer who bills by the eyebrow raise. Click here to learn more.
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