Is Dropshipping Legal? Rules and Risks (2027)

This post is for information only. You are responsible for reviewing and using this information appropriately. This content doesn’t contain and isn’t meant to provide legal, tax, or business advice. Requirements are updated frequently and you should make sure to do your own research and reach out to professional legal, tax, and business advisers, as needed. To sell products using the Shopify platform, you must comply with the laws of the jurisdiction of your business and your customers, the Shopify Terms of Service, the Shopify Acceptable Use Policy, and any other applicable policies.

Dropshipping is legal in most places. It can become risky or illegal when sellers mislead customers, sell counterfeit or unsafe products, and ignore tax rules.

Dropshipping is an order fulfillment model where sellers forward orders to a supplier, who packages and ships the item to the customer.

Dropshipping stores operate like any retailer in that they must follow the laws and platform rules that apply to their products, suppliers, and customers. Here are the legal considerations to review before starting a dropshipping business.

Is dropshipping legal?

When sellers follow applicable laws and platform policies, dropshipping can be a legitimate business model. Legal and financial risk still depends on the products, suppliers, markets, and claims involved.

The same laws and regulations apply as they would to any other ecommerce business, even if you’re selling internationally.

Dropshipping requirements vary by country:

• In the US, sellers must comply with applicable federal, state, and local rules.
• In the EU, online sellers must provide clear information about the product or service, price, shipping costs, and delivery time. EU consumers also generally have a 14-day withdrawal right for online purchases, subject to exceptions. The EU’s General Product Safety Regulation also requires covered consumer products to meet safety requirements and have a responsible economic operator established in the EU.

When choosing suppliers, use established supplier networks or dropshipping apps that provide additional verification and support. Check that dropshipping suppliers don’t use trademarks or logos without authorization, infringe another company’s intellectual property rights, or send counterfeit goods.

Ask a lawyer to review supplier contracts, return terms, product liability language, shipping responsibilities, and customer-facing policies.

Legal requirements for dropshipping

Before starting a dropshipping business, research the specific requirements for any countries you plan to sell in, sell to, or source products from. These include the following compliance issues:

Intellectual property laws

Dropshipping can create legal risk when sellers offer counterfeit, unauthorized, or infringing products. You may violate intellectual property rights if a supplier uses copyrighted material, trademarks, product images, logos, or protected designs without authorization.

Consumer protection and product safety laws

Even if you don’t manufacture a product, your online business must comply with applicable product safety and consumer protection laws.

If you’re dropshipping baby products in the US, for example, products may need a Children’s Product Certificate before they’re sold. You may face claims or enforcement if unsafe, recalled, mislabeled, or restricted goods reach customers.

If a product harms a customer, the seller may face claims depending on the product, jurisdiction, and seller role. Product liability insurance can help cover certain claims, but insurance coverage varies by policy. Some risk coverage may need to be added or bought separately.

Truth in advertising laws

Dropshipping businesses are responsible for accurately representing products in any marketing efforts. Customers and regulators may direct claims at the business that markets and sells the product, even when a supplier fulfills the order.

In the United States, the Federal Trade Commission can bring a case against dropshipping companies that are found to be misleading customers.

Two notable rules include:

• The Mail, Internet, or Telephone Order Merchandise Rule. Online orders must be shipped within the advertised time frame. If you don’t specify any timelines, the FTC assumes a 30-day period. If shipping is delayed, you must notify customers and offer them the option to consent to the delay or cancel for a refund.
• The Consumer Reviews and Testimonials Rule. The FTC bans fake or deceptive reviews. If you’re importing these reviews from suppliers, ask for verification that they were genuine opinions shared by real customers.

Tax and licensing laws

Many states require a business license, resale certificate, or sales permit to operate a retail business. A resale certificate may allow you to purchase products for resale without paying sales tax on those purchases, depending on state requirements. Contact a local legal professional if you’re unsure about licensing requirements for your area.

Dropshipping businesses may need to collect and remit sales tax, VAT, GST, or similar taxes depending on where the business, supplier, and customer are located.

You must also pay income tax on your business profits. In the United States, payment platforms like Shopify Payments or PayPal file Form 1099-K with the IRS if you meet processing thresholds. For tax purposes, you are legally required to report all income and pay taxes on your earnings, whether or not you receive a form.

Depending on where your customers are located, you may need to collect tax on each sale. In the US, sales tax obligations often depend on physical presence and state economic nexus rules. Since South Dakota v. Wayfair, states may require remote sellers to collect and remit sales tax even without physical presence in the state.

Shopify Tax helps you identify potential sales tax liability from your Shopify admin. “We no longer need to manually update sales tax information, saving us countless hours and reducing the risk of errors,” says Ailee Fei, founder of Daily Charme. “It’s been a game-changer for our small business.”

Business registration and legal liability

Your dropshipping business structure affects taxes, legal protections, and how much personal property may be at risk.

A sole proprietorship has no legal separation between you and your business. If your dropshipping store faces legal action over a defective product or copyright issue, your personal assets, like savings or property, could be seized to settle the debt.

Some sellers form an LLC or corporation to separate personal and business assets. Requirements vary by state, but this can help protect personal property from business lawsuits.

Depending on your business structure and location, you may need to register your business to open a business bank account, secure better payment processing rates, obtain sales tax permits, and get an employer identification number (EIN) that some wholesalers require. You may also need to register a DBA if your dropshipping store uses a different brand name from your business name.

Platform-specific requirements

Platforms like Amazon, Etsy, eBay, and Walmart have specific requirements for selling dropshipping products. Entrepreneurs can have their listings removed, funds held, selling privileges restricted, or accounts suspended.

Amazon, for example, requires all dropshippers to remove supplier-branded packaging. Ask partners whether they offer custom packaging—such as branded inserts, invoices, and packaging—to meet Amazon’s dropshipping requirements.

Data protection laws

Like any online business, dropshippers must protect customer information and follow privacy laws. Depending on where you operate and sell, this may include the EU’s General Data Protection Regulation (GDPR) and California’s Consumer Privacy Act (CCPA).

If you share customer data with suppliers or use dropshipping software that handles customer information, you’re responsible for keeping that data safe. Violations can lead to enforcement, fines, customer complaints, and platform action depending on the law and facts involved.

Configure customer privacy settings in Shopify to help meet the regulations for the regions you’re selling in. This may include cookie banners and explicit opt-in for marketing forms.

Food, drugs, and alcohol regulations

Selling food, supplements, drugs, or alcohol may require special permits. Some platforms restrict or prohibit these products. Check platform policies before listing them.

In the US, the FDA prohibits marketing CBD as a dietary supplement and adding it to food sold in interstate commerce. Before dropshipping CBD products, review current federal hemp definitions, state restrictions, labeling, and product claims. Obtain supplier testing reports and consult legal counsel before listing or importing products.

Sanctions compliance

Government sanctions may restrict sales to certain countries, individuals, or businesses. Check both your suppliers and customers against the US Treasury’s Sanctions List Search tool. You could face fines if you sell to sanctioned parties or jurisdictions, even by accident.

Forced labor regulations

If you import products or source from overseas suppliers, review forced labor rules that may apply to your supply chain. You may face customs holds, import restrictions, platform action, or legal claims tied to forced labor issues depending on your role and jurisdiction.

Request supplier documentation, review manufacturing locations, and avoid suppliers that cannot explain where and how products are made. Printful, for example, is a member of Sedex, a platform that helps businesses assess supply chain practices.

Is dropshipping legal under 18?

There isn’t a universal minimum age for dropshipping, but minors may need an adult to set up and manage business accounts.

In many jurisdictions, contracts signed by minors may be voidable or unenforceable against the minor. If you run into an issue with your dropshipping supplier, for example, the contract may not be enforceable.

Some payment processors and ecommerce platforms also prohibit users under the age of 18 in their terms of service. For instance:

• Shopify, including Shopify Payments, requires account holders to be 18 years old or the age of majority in their jurisdiction.
• PayPal generally requires US users to be at least 18 or the age of majority.
• Stripe’s age rules vary by account type and country.

Platform-specific dropshipping requirements

Each ecommerce platform or marketplace has its own rules for sellers who use dropshipping or third-party fulfillment:

Shopify

Requirements to launch a Shopify store using Shopify Payments include:

• Shopify requires account holders to be at least 18 or the age of majority in their jurisdiction, whichever is higher.
• You must sell products that aren’t prohibited.
• You must be in a supported country.
• You must follow the Terms of Service and Acceptable Use Policy.

Shopify has its own supplier network, Shopify Collective, that lets eligible brands dropship products from other Shopify retailers. This program has its own eligibility criteria:

• Your store must have an active Shopify plan.
• Your business location and store currency must be supported by Collective. Your suppliers must operate in the same country and use the same store currency.
• Shopify Payments must be activated with active payouts, and its payout currency must match your store currency.
• UK and EU businesses must use Shopify Tax, Basic Tax, or a third-party tax app. Businesses required to register for VAT must also confirm their tax registration details.
• Shopify Network Intelligence must be activated.
• Your store must meet Collective’s policy, trust, safety, and fraud requirements, including identity verification when requested.

Amazon

If you plan to start Amazon dropshipping, here are the requirements to follow:

• You must be the sole seller of record for products.
• Your business must appear as the seller on packing slips, invoices, and other information in connection with products.
• To avoid confusion, you must remove all information identifying the third-party seller before shipping the order to customers.
• You must be responsible for accepting and processing returns.
• You must follow all terms of your seller agreement and Amazon’s dropshipping policy.

eBay

eBay bans dropshippers from purchasing items from another retailer or marketplace to fulfill customer orders, a practice known as retail arbitrage.

If you’re planning to dropship on eBay, you must own the items before listing them, or have an agreement with a wholesale supplier to list and sell its products.

If using third-party fulfillment, you must:

• Clearly identify yourself as the seller on all packing slips and invoices.
• Ensure safe delivery within stated time frames.
• Have a contract preventing the provider from misusing eBay order information.

Etsy

Etsy prohibits dropshipping except for craft and party supplies. Reselling is also not allowed on Etsy except for the following items that are handpicked or sourced by sellers:

• Craft and party supplies
• Vintage items more than 20 years old
• Gift baskets personally curated and packaged by sellers

Etsy does allow sellers to partner with print-on-demand companies for manufacturing and fulfillment of their original designs. For example, you could create custom clothing with the Printful app, then sell those products on Etsy. Printful creates and ships the order directly to the Etsy customer.

Walmart

To dropship on Walmart, you must meet the marketplace’s seller requirements, including:

• Have a business tax ID or business license number and verified name and address
• Have a history of marketplace or online sales
• Provide the required product identifiers, such as GTINs or UPCs, unless Walmart approves a GTIN exemption.
• Avoid items on Walmart’s Prohibited Products Policy list
• Have a supplier that meets Walmart’s fulfillment requirements, including fulfillment through Walmart Fulfillment Services or another US warehouse with returns capabilities

AliExpress

AliExpress allows dropshipping and includes features to help dropshippers find products to sell. You can use apps like DSers to import products from AliExpress to your Shopify store and speed up order processing.

How to Start a Dropshipping Business on Shopify (+ TOP 10 Trending Items To Dropship)

Start dropshipping with Shopify

Shopify users can connect their stores with dropshipping suppliers to automatically import product listings and submit customer orders.

Before you start, work through this compliance checklist and consult a legal professional to make sure you’re complying with relevant laws. Review questions such as:

• Have you checked that your products, images, and marketing materials respect copyright, trademark, and other intellectual property rights?
• Do products meet the necessary product safety regulations?
• Do customer reviews meet the FTC’s regulations?
• Can suppliers ship orders within your advertised timeframe?
• Is your business registered and licensed, if required?
• Are you collecting and remitting sales tax, if required?
• Are you compliant with data protection laws, such as GDPR and CCPA?
• Have you checked suppliers and relevant transactions for applicable sanctions restrictions?
• Have you reviewed suppliers for potential forced labor risks?
• Have you verified your suppliers and their products?
• Do you meet the requirements of your ecommerce platform or marketplace?

Start with Shopify Collective to sell products from verified Shopify brands, or explore dropshipping apps like DropCommerce, Syncee, and AI Dropship to connect with suppliers worldwide. Find out how to start dropshipping with Shopify today.