Navigating Shopify Product Compliance [Comprehensive Guide]

Did you know that the global eCommerce market is expected to reach $4.8 trillion by 2025?

If you’re running a Shopify store, understanding product compliance is essential for maintaining a safe, trusted, and thriving business.

In this guide, you’ll learn what Shopify product compliance really means, the key regulations you need to follow, and practical tips to stay ahead of common pitfalls.

Let’s get started!

Key Legal and Regulatory Requirements for Shopify Product Compliance

Maintaining Shopify product compliance means ensuring your store and products meet all applicable laws, regulations, and Shopify’s platform rules.

This includes consumer protection, tax, data privacy, and product safety requirements in every market where you sell your products.

For example, Shopify’s documentation emphasizes that merchants must follow “consumer protection laws and regulations” covering advertising, returns, and product safety, and provide clear contact and policy information on their store.

Here's a quick rundown of the legal areas you need to be aware of:

➸ Product Safety & Labeling:

• Ensure that products meet safety standards and are properly labeled.

• U.S. children’s products require a Children’s Product Certificate (CPC) and third-party testing.

• Always include necessary safety warnings in local languages, as required by regulations such as those in the EU, which mandate the provision of multilingual safety information.

• Label products with regulatory marks (e.g., CE/UKCA in Europe, FCC for electronics in the U.S.).

➸ Business Registration & Licensing:

• Legally form and register your business (e.g., LLC or corporation) in your jurisdiction.

• Obtain an Employer Identification Number (EIN) for tax purposes.

• Obtain any necessary licenses or permits required for your industry.

• Most states require incorporation or registration before doing business.

➸ Sales Tax Registration:

• U.S. sellers must register for sales tax in any state where they meet economic nexus thresholds (following the South Dakota v. Wayfair decision).

• Obtain a sales tax permit in each relevant state.

➸ Data Privacy:

• Comply with data protection laws (e.g., GDPR in the EU, CCPA in California).

• The GDPR applies even to non-EU businesses selling in the European Union.

• Implement privacy policies, cookie banners, and data-subject request procedures.

➸ Consumer Protection & Returns:

• Abide by laws on refunds, warranties, and accuracy of advertising.

• Provide clear refund/shipping policies.

• Honor returns and warranties as required by local law.

➸ Restricted Products:

• Review Shopify’s Acceptable Use and Payments policies.

• Shopify forbids categories like weapons, drugs, tobacco, adult content, gambling, and counterfeits.

Pro Tip

Signify automatically tracks regulatory changes across over 1,000 frameworks, ensuring your product labels are always up to date with the latest safety and labeling standards.

It also maintains a comprehensive audit trail of your compliance data and validates your product artwork, helping you stay aligned with global requirements without the hassle.

Regulated Products on Shopify

Now let’s explore some of the product categories on Shopify that are subject to specific regulations and compliance requirements.

Laws and Regulations for Selling Alcohol on Shopify

Selling alcohol through Shopify requires compliance with a variety of laws and regulations, which vary depending on the region where your business operates and the regions where your products are sold.

These rules cover licensing, age verification, labeling, and shipping, among other aspects. Below are key regulations to be aware of across different regions:

Laws and Regulations for Selling ENDS Products on Shopify

When selling Electronic Nicotine Delivery Systems (ENDS) products, such as vapes, e-cigarettes, e-liquids, and e-juice, through Shopify, it is essential to comply with local and international regulations.

These regulations vary by region, so it is essential to be aware of the specific rules for the country or jurisdiction in which your store operates or where your customers are located.

Below is a summary of the key regulations in different regions:

Laws and Regulations for Selling Hemp and Hemp-Derived Products on Shopify

Selling hemp and hemp-derived products, such as CBD products, requires compliance with various legal regulations that vary by region.

Shopify supports the sale of these products, but merchants must ensure compliance with all applicable federal, state, and local laws, as well as Shopify’s policies.

Below is a summary of the requirements for selling them in different regions:

Shipping Dangerous Goods in the United States and Internationally

When shipping dangerous goods, such as flammable liquids, explosives, or aerosols, it is crucial to comply with a wide range of laws and regulations, both domestic and international.

These regulations are in place to ensure the safety and security of goods during transportation.

Below is an overview of the key considerations:

Shopify Product Compliance in the European Union: GDPR and GPSR

GDPR

If you’re selling to customers in the EU, GDPR applies to your store.

This regulation establishes strict guidelines for handling personal data and ensures consumers' rights, including access to their data and the ability to request its deletion.

Shopify highlights that even businesses outside the EU must comply if they sell goods or services to EU customers.

➸ To stay compliant:

• Implement clear privacy notices and the lawful handling of personal data.

• Ensure that consumer rights are honored, including the right to access and delete data.

• Utilize privacy features, such as cookie consent banners.

• Maintain a GDPR-compliant privacy policy.

EU VAT Rules

The EU operates under a value-added tax (VAT) system, which applies to cross-border B2C sales.

The EU has simplified VAT compliance by establishing a single €10,000 threshold applicable across all member states, thereby eliminating country-specific thresholds.

Through the One-Stop Shop (OSS) scheme, you can register for VAT in one EU country and file a single VAT return for all EU sales.

➸ This simplifies compliance in the following ways:

• Charge the VAT rate of the customer’s country at checkout.

• File VAT returns through the OSS portal.

• All imported goods to the EU are now subject to VAT, as the previous €22 import exemption has been removed.

The OSS portal enables merchants to register for VAT in one EU country and pay VAT on all EU sales, streamlining the process significantly.

GPSR (General Product Safety Regulation)

Effective December 2024, the General Product Safety Regulation (GPSR) replaces the old EU safety directive, tightening product safety standards for all consumer goods sold in the EU, including imports.

Under GPSR, products must pass detailed risk assessments and have comprehensive safety documentation.

A new requirement is that all products sold in the EU must designate a "Responsible Person" who is based in the EU and accountable for product compliance.

➸ Here’s what you need to do:

• Ensure your products pass risk assessments and have the appropriate safety documentation.

• Appoint a Responsible Person in the EU (e.g., an importer or authorized representative).

• Provide technical documentation proving product safety for foreseeable use and potential hazards.

• Include clear safety warnings and information in the languages of the destination country.

• Display the Responsible Person’s name and address on product packaging.

Shopify Product Compliance in the United States: Business Formation and Sales Tax

Business Formation

To sell legally in the U.S., you must establish a legal business entity (such as a sole proprietorship, LLC, or corporation) and register it with your state.

You will also need an Employer Identification Number (EIN) from the IRS, which is used for tax purposes, and open a business bank account.

Additionally, ensure that you register any "doing business as" (DBA) names as required, and research state and local licenses, as even online businesses often require general business licenses or industry-specific permits.

➸ To stay compliant:

• Set up a legal business entity (sole proprietorship, LLC, or corporation).

• Obtain an EIN from the IRS for tax purposes.

• Open a business bank account.

• Register any "doing business as" (DBA) names.

• Research state and local licensing requirements.

Sales Tax Nexus and Registration

In the U.S., each state has its own rules for economic nexus.

This means that once your sales (or number of transactions) exceed a state's threshold, you are required to register for sales tax in that state.

For example, Arizona has a $100,000 sales threshold, while states like California and New York have higher thresholds, such as $500,000.

➸ To stay compliant:

• Understand the economic nexus thresholds in each state where you do business.

• Register for sales tax once you exceed the sales or transaction threshold.

• Configure your Shopify store to collect the correct sales tax rates.

Here are the sales tax nexus thresholds for some states:

➸ How to handle taxes:

Once you exceed a state’s threshold, you need to register with that state’s revenue department and obtain a sales tax permit.

After registration, you’ll need to configure your Shopify store to collect the correct sales tax rate on applicable products.

➸ Tip:
Shopify provides tools to help you automate this process, so you can focus on running your business without worrying about keeping track of tax rates in multiple states.

Shopify Compliance Reports That You Need to Know

Shopify maintains official compliance reports covering data security standards on its platform.

These, among others, include PCI DSS (Payment Card Industry Data Security Standard) and SOC (Service Organization Control) audit reports.

Merchants can access these reports via the Shopify Help Center’s Compliance Reports page.

➸ Key points:

• PCI DSS Attestation: Shopify regularly completes PCI DSS audits and publishes an Attestation of Compliance (AoC) on its Compliance Reports page. This AoC certifies that Shopify’s card data environment meets industry security requirements. Shopify also publishes quarterly scan results (e.g., ASV scans) in these reports.

• SOC 2 & SOC 3 Reports: Shopify’s infrastructure is audited against SOC 2 Type II standards. The SOC 2 report, available in the Compliance Reports section, covers Shopify’s security and availability controls and is issued by an independent auditor. (SOC 3 is a public summary of the SOC 2 findings.)

Compliance Challenges for Shopify Merchants

Some of the most common compliance challenges for Shopify merchants are:

• Managing Third-Party Apps and Data Privacy Risks: Audit app privacy policies, use reputable apps, and remove unused ones, as you’re responsible for compliance.

• Prohibited Products and Restricted Categories on Shopify: Selling prohibited items can lead to suspension. Review Shopify’s policies before listing products.

• Navigating International Sales Compliance on Shopify: Ensure products have the correct Harmonized System (HS) codes, manage VAT collection, and comply with the destination country's rules.

• Handling Product Recalls and Safety Issues: Remove recalled products immediately and notify customers. Maintain necessary safety certifications.

• Keeping Up with Changing Compliance Regulations: Regularly update policies and stay informed about new regulations in your operating regions.

• Dealing with Account Suspensions Due to Non-Compliance: Follow Shopify’s Terms of Service and resolve issues promptly if suspended.

• Compliance with Shipping and Fulfillment Regulations: Label packages accurately, adhere to packaging standards, and complete customs forms correctly.

• Managing Sales Tax and VAT Compliance: Set up tax collection based on your state or country, and utilize Shopify Tax for seamless automation.]

Key Benefits of Using Signify for Shopify Product Compliance

Signify is an AI compliance agent that helps you navigate product compliance.

Whether you’re selling or producing locally or internationally, Signify streamlines your compliance tasks, minimizes risks, and keeps you ready for any audits or documentation reviews.

Here’s how Signify can assist with your Shopify product compliance:

➸ Proactive Audit Readiness: Signify monitors your compliance data to detect gaps early, ensuring you're prepared for any audits or product checks Shopify may conduct.

➸ Automated Documentation Management: All compliance files are auto-organized by product category and region, making it easy to access the right documents when Shopify or regulatory authorities request them.

➸ Real-Time Compliance Risk Alerts: Get instant notifications when Shopify’s policies or regulatory standards change, so you can update your listings quickly and avoid potential disruptions.

➸ Guided Corrective Actions: If compliance issues are detected, Signify provides step-by-step guidance to resolve them promptly, ensuring your listings stay active and compliant on Shopify.

➸ Support Across Regulated Shopify Categories: Signify helps Shopify sellers navigate compliance in high-risk industries, including:

• Food & Beverage

• Personal Care & Cosmetics

• OTC Healthcare

• Tobacco

• Pet Care

• Consumer Electronics & Appliances

• Furniture

• Tools & DIY Equipment

• Sporting Goods

Ready to streamline your compliance processes and take control of your Shopify store’s product regulations?

Try Signify today and experience how AI-powered compliance agents can help you stay organized, audit-ready, and compliant across all aspects of your Shopify business.