Doing Business Online? 5 Ways to Reduce Legal Risks

“Any online operation should periodically assess its legal exposure to better calibrate its contractual, technological, insurance, compliance and other liability minimizing measures.” (From Limiting Legal Exposure for Online Platforms with a Preliminary Legal Audit by Wahab & Medenica LLC) 

Whether you’re selling silk pyjamas, second-hand books, or software, it’s likely that your business has a web presence. And it’s just as likely that your online operations create unanticipated legal risks for your company, many of which have little to do with the business you’re in. From lawyers and law firms on JD Supra, here’s five ways you can reduce the risk of being online:

1. Keep your policies up-to-date…

“Public facing privacy policies can quickly become stale as your company adds new online offerings or tracking technologies, or changes the way it handles personal and sensitive information in response to new opportunities. An outdated policy poses legal risks, as falling short of its promises could amount to ‘unfair or deceptive trade practice.’” (From Best Practices for New Media Part 1: Privacy and Information Management by Ingram Yuzek Gainen Carroll & Bertolotti, LLP) 

2. Train your employees so they’ll know what to do…

“Implement an effective training program on how your employees should use social media, with emphasis on areas of particular concern for your company which may include, for example, protecting the privacy interests of your company clients, complying with FINRA/SEC social media guidelines, antitrust compliance, not disclosing confidential, proprietary information, and brand protection.” (From 10 Social Media Must Haves For Your Corporate Compliance And Ethics Program by Sheppard Mullin Richter & Hampton LLP) 

3. Tread carefully when you’re making a deal…

“Online daily deals and their associated advertising are clearly subject to general consumer protection laws prohibiting false or misleading advertising and unfair competition. These laws, too, have been the source of much of the recent Groupon litigation and regulatory activity. Compliance in this regard can be complicated by the merchant’s lack of direct control over the presentation of the deal to the consumer, as well as screen space limitations (especially for mobile devices) and the preferences of marketing departments for punchy messaging.” (From Online Deal Programs and Merchant Liability by International Lawyers Network) 

4. Make sure there are no weak links in the chain…

“Any contract your business signs with a cloud service provider should address who will actually be handling your company’s data, whether any subcontractors will be allowed to further subcontract out the storage of your company’s data, whether you will receive notice when your cloud service provider switches subcontractors, and what data security standards any subcontractors should be able to satisfy.” (From Top Questions to Ask Before your Business Stores Company Data In The #Cloud by Wahab & Medenica LLC) 

5. This one’s easy: to stay out of trouble, don’t help others break the law…

“… [O]ne new trend is holding web hosts liable for assisting e-commerce businesses in the sale of counterfeit goods. For instance, a federal jury in South Carolina recently ordered a web host to pay 27 times more than the actual trademark infringer who had used the web host’s server in its sale of counterfeit goods.” (From Contributory Trademark Infringement: An Issue for Web Hosts by James Billings-Kang) 

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