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3 Critical Alerts Regarding Your Website Legal Forms For Privacy and Data Security

By Chip Cooper in Featured

Website privacy and data security violations continue to be the most critical legal concern for webmasters of software-as-a-service (SaaS) websites and ecommerce websites.

Just think about it – most marketing practices involve capturing data, including personal information about prospects, and using this data to market products or services.

How you collect, store, use, and share this information is now highly regulated, not only by the Federal Trade Commission (FTC), but also by various states. What you say in your website legal forms, website legal documents, and privacy policies is critical.

Three recent legal developments illustrate why webmasters of SaaS websites and ecommerce websites should monitor and stay current with these developments, or suffer severe consequences.

New Massachusetts Data Security Statute

Effective March 1, 2010, the Commonwealth of Massachusetts requires new data security requirements for personal information of Massachusetts residents (201 CMR 17.00). The new requirements apply to all persons or businesses that “own, license, store or maintain personal information about Massachusetts residents.

“Personal information” includes a Massachusetts resident’s name if linked to his/her social security number, driver’s license or state ID card number, or financial account/credit/debit card number that would allow access to the resident’s financial records.

If you’re regulated by the new statute, you’re required among other things to develop and maintain a data security policy and to require encryption “to the extent technically feasible” of the storage and transmittal of personal information regardless of whether the storage is electronic or the transmittal is by portable device (laptop or handheld device) or over public networks or the Internet.

Penalties and fines for violations are $100 per person affected with a maximum cap of $50,000.

FTC Issues Guides for Peer-to-Peer Networks

On February 22, 2010, the Federal Trade Commission (FTC) announced that it had notified almost 100 organizations — including large and small private and public companies, schools, and local governments – that their customers’ or employees’ personal information was vulnerable on peer-to-peer (P2P) networks.

The FTC was concerned that P2P networks operated by these organizations may inadvertently be providing an opening for unintentional access to personal information. According to FTC Chairman Jon Leibowitz, “Companies should take a hard look at their systems to ensure that there are no unauthorized P2P file-sharing programs and that authorized programs are properly configured and secure.”

In addition to the notification letters, the FTC issued a guide on its ftc.gov website entitled “Peer-to-Peer File Sharing: A Guide For Business”. The guide provides data security recommendations including identification of security risks and steps to protect personal information from unauthorized access on P2P networks. are no unauthorized P2P file-sharing programs and that authorized programs are properly configured and secure.”

ControlScan CEO Pays $102,000 in FTC Settlement

On February 25, 2010 the FTC announced a settlement with ControlScan.com of FTC charges that ControlScan had misled consumers about how often ControlScan monitored websites, including steps taken by ControlScan to verify the websites’ privacy and security practices.

The founder and former CEO of ControlScan entered into a separate settlement requiring him to pay $102,000 in ill-gotten gains.

Privacy and security certification programs such as ControlScan are used by webmasters to provide assurance to consumers regarding how the website treats the privacy and security of personal information. The FTC alleged that ControlScan provided its certifications to websites with “little or no verification” of their privacy protections.

Most of these website documents and legal forms should be posted on the website, and therefore would be visible to any potential joint venture partner checking out your website.

This case underscores how seriously the FTC views privacy and security of personal information stored on websites, as well has how closely the FTC is observing representations regarding privacy and security. The FTC is on the lookout not only for websites that misrepresent what they do regarding privacy and security, but also what certification websites represent that other websites do about privacy and security.

Conclusion

The worst mistakes a n ecommerce webmaster can make is to have “borrowed” a privacy policy from someone else or to have an outdated privacy policy that either does not make the required disclosures or misrepresents what the website does regarding privacy and security.

The legal liability can be substantial.

This article is provided for educational and informative purposes only. This information does not constitute legal advice, and should not be construed as such.

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Leading Internet, IP and software lawyer Chip Cooper has automated the process of drafting website legal forms, website legal contracts, and website documents online. Use his free online tool – Website Documents Determinator – to determine which documents your website really needs for website legal compliance. Discover how quick, easy, and cost-effective it is to draft your website legal forms at http://www.digicontracts.com/ .

Do Your Website Legal Documents Position You for Marketing Success?

By Chip Cooper in Featured

Website legal contracts, website legal forms, and website documents as positioning statements for marketing purposes? You’ve got to be kidding, right?

That’s the typical reply I get when I advise clients regarding website legal compliance. They’re aware of the critical need to manage their legal exposure, particularly after the Federal Trade Commission (FTC) Guides went into effect on December 1, 2009.

They’re not aware of how these website documents also make a positioning statement – either favorably or unfavorably – to their potential customers and joint venture partners.

Two Kinds of Websites

In my experience helping webmasters update their websites for website legal compliance, I see two kinds of websites. It’s really easy to spot them and to see the difference between the two kinds of websites.

• Serious websites – websites whose webmasters intend to operate them as serious ecommerce businesses; their webmasters design and operate these websites consistent with sound SEO, navigation, and marketing principles. They are in it for the long term, and are committed to doing it right.
• Hobby websites – websites whose webmasters, regardless of intentions, actually operate their websites as a kind of hobby; although these ecommerce sites may make some money, their webmasters either do not have the time or otherwise are not able or willing to commit to incorporating sound SEO, navigation, and marketing principles that are essential for long term success.

Both of these types of websites have the same legal compliance requirements, and both should be updated for legal compliance by their webmasters for purposes of managing their legal exposure.

Webmasters of serious websites, however, have a more strategic reason for maintaining website legal compliance. As many of them are now discovering, maintaining website legal compliance can position their websites favorably to their potential customers and joint venture partners.

Savvy Customers

Customers are more savvy these days. One of the most critical concerns of both individual consumers and businesses that are your potential customers is privacy and the related issue of data security.

Prior to 2004, the typical website privacy policy contained trite statements like “we respect your privacy”, and little else.

Beginning in 2004, website privacy policies began to conform to the standards set by the California Online Privacy Protection Act of 2003 (OPPA) which became effective on July 1, 2004. These standards require, at a minimum, that your privacy policy describe:

• how information is collected from website visitors,
• the categories of information collected,
• how and for what purposes this information is shared with others, and
• how personal information may be updated by users.

Since 2004, based in part on lawsuits brought by the FTC and their related settlements, additional issues are now covered in website privacy policies, and they include:

• the passing of third-party cookies (for example, by Google Analytics),
• whether the website engages in behavioral advertising (for example, Google’s Adsense),
• adequate notification and disclosure of online behavioral tracking activities, and
• disclosure of personal information access by third-party service providers.

An up-to-date privacy policy will exhibit these features, and more. For this reason, it’s relatively easy to distinguish an up-to-date privacy policy from one that doesn’t pass muster.

The take-away: given that savvy potential customers can easily evaluate your privacy policy, and that they prefer doing business with someone they trust, you should not be surprised that an up-to-date privacy policy will position your website as serious website – one to be trusted with sensitive customer information.

Prudent Joint Venture Partners

Similar logic applies to potential joint venture partners.

Successful webmasters and web marketers look for joint venture partners that can make them money. However, they also tend to do business prudently – with serious websites, not hobby websites.

Ecommerce websites that are regarded as serious businesses will have some combination of these legal documents and website legal forms:

• FTC Guides Disclosure Policy,
• Legal Page,
• Terms of Use,
• DMCA Notice,
• DMCA Registration Form,
• Privacy Policy,
• Service Provider Privacy-Security Agreement,
• Customer Agreement (click-wrapped SaaS, Membership, Subscription, Account Agreement), and
• Red Flag Identity Theft Policy.

Most of these website documents and legal forms should be posted on the website, and therefore would be visible to any potential joint venture partner checking out your website.

The take-away: it’s relatively easy for a potential joint venture partner to evaluate the degree to which you qualify as a serious website merely by checking out your website legal documents and legal forms.

Conclusion

Website legal compliance is now a significant factor in evaluating serious websites, both by potential customers and joint venture partners. While legal compliance has always been necessary to manage liability exposure, it should become an important factor in positioning your website for success. Is your website making the right positioning statement?

This article is provided for educational and informative purposes only. This information does not constitute legal advice, and should not be construed as such.

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Leading Internet, IP and software lawyer Chip Cooper has automated the process of drafting website legal contracts, website legal forms, and website documents online. Use his free online tool – Website Documents Determinator – to determine which documents your website really needs for website legal compliance. Discover how quick, easy, and cost-effective it is to draft your website contracts at http://www.digicontracts.com/.

Ecommerce Websites: 3 Tips To Avoid Liability For Actions of Your Online Resellers

By Chip Cooper in Featured

Recent case law confirms once again: if online agreements are presented properly to end-users, they’re legally enforceable.

This continuing trend is good news for websites that contract with registered users though SaaS Agreements, Membership Agreements, Subscription Agreements, Terms of Sale, Content License Agreements, and the like.

Why? Among other things, this means that important legal disclaimers and limitations of liability are legally enforceable.

But what about liability exposure arising out of customer contracts entered into by your resellers? Are you liable for actions of your resellers?

The Direct Revenue Case

In the case of People v. Direct Revenue, the New York Attorney General in 2008 attempted to nail Direct Revenue for its distribution of software that served pop-up advertising software on consumers’ computers.

Direct Revenue is in the advertising business. It’s software client serves pop-up advertisements to consumer’s computer screens through the Internet. Direct Revenue does not charge fees to consumers. Instead, it charges fees to the companies whose products it advertises.

It’s interesting to note that one line of attack by the New York Attorney General focused on Direct Revenue’s “click-wrapped” (where the user clicks on “I ACCEPT”) end user license agreement (EULA) and Direct Revenue’s alleged deceptive and illegal practices. The court granted Direct Revenue’s motion to dismiss the claims noting that sufficient disclosure was given in the EULA, and the required elements for an enforceable agreement were followed.

Having failed with its first line of attack, New York’s additional line of attack focused on the customer agreements of Direct Revenue’s resellers in an attempt to hold Direct Revenue liable. The result was the same as with the EULA — Direct Revenue was held not liable.

New York conceded that Direct Revenue’s resellers were independent contractors rather than agents. Generally, a principal is not liable for acts of an independent contractor due to the lack of control over how the contractor’s work is performed. In addition, the court noted that Direct Revenue’s software distribution agreement required its distributors to obtain consent of consumers consistent with the EULA and prohibited distributors from holding themselves out as agents of Direct Revenue.

New York argued that Direct Revenue should be liable because it’s servers interacted with the consumers’ computers in the software installation process. The court pointed out that participation in installation was not enough for liability in the absence of participation in deceptive conduct that induced the installation.

Finally, New York argued that Direct Revenue should be held liable for the actions of its resellers on the ground that Direct Revenue ratified the conduct of its resellers. The court ruled that mere knowledge of consumer complaints was insufficient to impose liability on Direct Revenue, especially in light of the fact that when Direct Revenue had actual knowledge of a reseller misconduct, it took steps to remedy the problem.

3 Tips To Avoid Liability For Actions of Resellers

Potential liability for acts of online resellers is a major concern of ecommerce businesses which use reseller networks.

The Direct Revenue case teaches us that ecommerce sites may not be held liable for actions of their resellers if these 3 tips are followed:

1. if you transfer anything to a user’s computer, require your resellers to obtain consent of end-users consistent with your EULA – this means consent in clear and easy-to-understand (not deceptive) terms,
2. prohibit your resellers from holding themselves out as your agents, and
3. if a reseller does engage in misconduct, take affirmative steps to deal with the situation, including termination, if warranted (particularly if the reseller’s actions tend to indicate an agency relationship).

These 3 tips won’t guarantee that you have no exposure, but they’ll go a long way to protecting you from liability for actions of your resellers.

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Chip Cooper is a leading intellectual property, software, and Internet attorney who’s advised software and online businesses nationwide for 25+ years. Visit Chip’s http://www.digicontracts.com site and download his FREE newsletter and Special Reports: “Determine Which Legal Documents Your Website Really Needs”, “Draft Your Own Privacy Policy”, and “Write Your Own Website Marketing Copy — Legally”.

Should Your Affiliate Agreement Require Strict Compliance With CAN-SPAM, or More?

By Chip Cooper in Featured

If you recruit and manage an affiliate network, you’re probably aware that under the CAN-SPAM Act of 2003 (CAN-SPAM) you can be held liable for your affiliates’ spam. Consequently, your affiliate agreement should address the spam issue. Should you simply require strict compliance with CAN-SPAM, or should you require a more restrictive approach?

And if you’re an online marketer with no affiliate network, what are your rights to send unsolicited commercial email? And does the exercise of these rights make good business sense?

A little known provision of CAN-SPAM is the key to answering these questions. A clear understanding of this provision is essential, need-to-know information for affiliate program managers and all online marketers.

What is Spam?

Everyone has a personal definition of spam. For most, it’s simply the unwanted, unsolicited, irritating, emails that fill your inbox and require you to take the time to delete them. If you’re an affiliate program manager or an online marketer, your understanding should be more specific.

One definition of Spam that’s been kicked around a bit is “unsolicited, bulk email” (UBE). The email is unsolicited if the recipient has not granted permission to receive it. It’s bulk if the email is sent to a number of persons. Note that this definition focuses on consent (or the lack thereof) and not on the content of the email. Under the UBE concept, it doesn’t matter if the content is commercial, porn, or whatever – it’s still spam if it’s unsolicited and bulk.

Does The CAN-SPAM Act Outlaw UBE?

It doesn’t legally, but it does as a practical matter (sort of).

CAN-SPAM does not prohibit UBE per se. Instead, it permits commercial email, including UBE, if certain requirements are satisfied. These include:

• subject lines that are not misleading,
• transmission information that is not false or misleading, * procedures for recipients to opt-out of receiving additional emails, and
• a specific time (10 days) for removal of opt-outs from the mailing list, just to name a few.

So, UBE is authorized by CAN-SPAM provided the sender complies with CAN-SPAM’s specific requirements.

However, there is a little known and little understood provision of CAN-SPAM that may permit the blocking of legally compliant emails. This provision is Section 7707(c) which provides that it’s OK for Internet access service providers (also known as ISPs) to adopt and enforce policies for the screening out of undesirable email messages. Most ISPs rely on Section 7707(c) and do in fact screen out UBE.

The White Buffalo Case And Section 7707(c)

The case of White Buffalo Ventures, LLC v. University of Texas illustrates the application of Section 7707(c) of CAN-SPAM.

In the White Buffalo case, the 5th Circuit Court of Appeals affirmed a lower court decision standing for the proposition that CAN-SPAM did not prohibit the University of Texas (UT) acting as an ISP from screening out CAN-SPAM-compliant commercial emails sent by White Buffalo.

White Buffalo sent CAN-SPAM-compliant emails to UT students promoting its online dating service. When White Buffalo ignored UT’s cease and desist letter, UT screened out all subsequent emails from White Buffalo, and White Buffalo sued. The 5th Circuit affirmed that UT’s screening was permissible under CAN-SPAM.

Implications of Section 7707(c) for Affiliate Managers

One approach for affiliate managers is to require strict compliance with CAN-SPAM in their affiliate agreements. As discussed above, strict compliance means that affiliates may send UBE. And it also means that the UBE may be legally screened out by affected ISPs under Section 7707(c) of CAN-SPAM.

So, strict compliance with CAN-SPAM may lead to disputes and litigation between affiliates and ISPs, and the affiliate sponsor could be made a party to this litigation. For this reason, and given the fact that affiliate managers may be held liable for their affiliates’ spam, affiliate managers should consider requiring strict compliance with CAN-SPAM, plus an additional requirement prohibiting the sending of UBE.

Implications of Section 7707(c) for Online Marketers

Online marketers should also consider the consequences of sending CAN-SPAM-compliant UBE.

Although perfectly legal, UBE will be screened out by most (if not all) ISPs (also perfectly legal). Some of the UBE will certainly get through to intended recipients, but at what cost to your credibility and reputation?

Conclusion

Section 7707(c) is unique. Although CAN-SPAM allows the sending of UBE, Section 7707(c) also allows it to be blocked.

The legal, business, and practical effects of authorized blocking of CAN-SPAM-compliant UBE should be carefully considered not only by affiliate managers, but also by online marketers in general.

This article is provided for educational and informative purposes only. This information does not constitute legal advice, and should not be construed as such.

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Leading Internet, IP and software lawyer Chip Cooper has automated the process of drafting software, IT and website documents online. Use his free online tool – Website Documents Determinator – to determine which documents your website really needs for website legal compliance. Discover how quick, easy, and cost-effective it is to draft your Affiliate Agreements at http://www.digicontracts.com/.

2010 Resolution — Give Your Website a Legal Check-Up

By Chip Cooper in Featured

We all make New Year’s resolutions – some are personal, some are business or professional in nature. Even if we don’t actually make New Year’s resolutions, we engage in formal and informal “planning” as we look ahead to the new year.

If you operate a website, you’re probably aware that your website operations are now highly regulated. And the pace of legal regulations continues to accelerate.

CliffsNotes For Bloggers To Avoid The FTC’s $11,000 Fine For Endorsements

By Chip Cooper in Featured

If you’ve already read – and clearly understand – the 81-page Guides for the use of Endorsements and Testimonials in Advertising issued by the FTC on October 5, 2009, then read no further.

However, if you’re a blogger or other producer of consumer-generated online content, and you’re not quite sure about how to decipher the legaleze or how to comply with the Guides, then this article may be for you… particularly if you’re more than a little concerned about avoiding the $11,000 fine for non-compliance.

What’s This All About, Anyway?

I’ve read bloggers’ comments to the effect of “why is the Federal Trade Commission sticking its dad-gum nose into the blogosphere — how far will this go?” That’s one way to look at it – as an unnecessary intrusion by the government.

Another way to look at is that the Guides represent an “official” recognition that blogging has passed its adolescent stage. Blogging has grown up, and the FTC is the so-called new sheriff in town.

Now, any producer of consumer-generated online content – bloggers, podcasters and video producers – is being treated to the same truth in advertising rules that other businesses in the brick and mortar world have been living with for a long time.

When Do Bloggers Become Endorsers?

This is the key threshold question. If a blogger is not an endorser, then the Guides do not apply. However, if the blogger is an endorser, then the Guides apply and with them, potential liability.

If you want to actually read the Guides to find the answer, go to new Example 8 (pp. 50-51). Example 8 provides 3 scenarios where a consumer reviews a product or service on a blog:

• no endorsement – a consumer purchases a product with his/her own money, and posts a review or opinion on a blog (result: Guides do not apply do not apply because there is no relationship at all with the advertiser; no worries);
• no endorsement – same scenario, except that a coupon for a free trial of the product is generated by the store’s computer, based on his/her purchases (result: Guides do not apply because there is no relationship with the advertiser indicating “sponsorship”; no worries); and
• endorsement – the consumer is part of a network marketing program where he/she periodically reviews products and receives a free product for which he/she writes reviews (result: Guides apply because there is a relationship with the advertiser based on the stream of free products indicating “sponsorship”; there are legitimate worries about how to comply with the Guides).

Suggestions For Bloggers Who Act as Endorsers

If you’re a blogger who acts as an endorser, then you should take care to understand and comply with the Guides to avoid a $11,000 fine by the FTC.

In simple terms, the basic rules are these:

• disclose “material connections” you receive for promoting someone else’s product or service, and
• disclose typical results that should reasonably be expected from a product or service (“results not typical” disclaimers won’t work anymore).

The real trick is understanding how to comply with these basic rules. The following is a list of examples and suggestions to assist you:

• if you purchase a product and pay for it with your own money, then blog about it, you’re not regulated by the Guides – no worries;
• if you are paid for product review, you should disclose who paid you that you were paid for the review (you’re clearly regulated by the Guides);
• if you regularly get free products and blog about them (e.g. a book reviewer), you should disclose who sent you the product and that it was free (you’re clearly regulated by the Guides);
• however, if you don’t routinely blog about products, or you don’t routinely receive free products, but you receive a free product that’s not very valuable and you blog about it, you’re probably not regulated by the Guides;
• even if you write a negative review of a product or service you’re not off the hook — if you’re required by the Guides to make disclosures, the disclosure rules still apply, even to negative reviews;
• if you’re an endorser, you should be a bona fide user of the product or service at the time the endorsement is given – fake endorsements are deceptive, and won’t comply with the Guides;
• disclosures should not be after-the-fact; they should be made at the time of the endorsement and live with it;
• disclosures should be clear and conspicuous – it’s not required that the disclosure be in ALL CAPS, but all caps disclosures would go a long way toward satisfying the clear and conspicuous requirement; * example disclosure: FTC GUIDES NOTICE: I RECEIVED THIS PRODUCT FROM XYZ, INC. FREE OF CHARGE, or FTC GUIDES NOTICE: THIS PRODUCT WAS PROVIDED FREE OF CHARGE BY XYZ COMPANY; and
• if you regularly get free products and blog about them (e.g. a book reviewer), you might consider adding a clause to your website’s Terms of Use regarding this business practice.

Conclusion

Prior to the issuance of the Guides by the FTC – which go into effect on December 1, 2009 – the blogosphere was sort of like the wild, wild west. Few if any rules, anything goes… and that sadly included fake endorsements and material relationships that weren’t disclosed.

The Guides were intended to address some of these abuses. Despite the good intentions motivating the Guides, there are legitimate concerns that the Guides may have gone too far. Critics argue that they are overbroad, and that they may create as many problems as they solve. Legal scholars debate whether they are contrary to established legal precedent.

Despite the misgivings of some and debate among legal scholars, the new FTC Guides are here to stay. They represent not only a win for consumers, but also a wake-up call to bloggers. The blogosphere has now come of age, and this requires a much greater sense of responsibility in a highly regulated environment.

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Leading Internet, IP and software lawyer Chip Cooper has automated the process of drafting website documents for small websites with his MyLegalFirewall website documents drafting service. Discover how quick, easy, and cost-effective it is to determine which legal documents you need, draft them online, and claim your FREE Special Report, Determine Which Legal Documents Your Website Really Needs, at ==> http://digicontracts.com/kits/firewall.aspx

3 Critical Things Blog Site Webmasters Need To Know About The FTC’s New Blog Regs

By Chip Cooper in Featured

In recognition of the increasing influence of social media online, the Federal Trade Commission (FTC) on October 5, 2009, for the first time since 1980, issued new regulations governing online testimonials and endorsements by bloggers.

If you operate a blog site, your exposure to legal liability may have increased exponentially. Violators could be fined up to $11,000. And you face new liability associated with statements made by your endorsers, such as affiliates.

It’s critical that you understand how these regulations affect your website business.

A Quick Summary

In a nutshell, the new regulations are aimed at protection of online consumers. The FTC wants to regulate blogs to see if they’re trading testimonials and favorable reviews for some kind of financial reward. That’s a good thing.

The not-so-good-thing is that the new regulations may be overbroad and even in conflict with existing legal precedent. As a result, they may subject harmless, every-day activities to potential liability. Serious liability.

A good way to see how the regulations affect you is to consider 3 basic questions discussed below.

No. 1 – Threshold Question: Are You Even Covered By The New Regulations?

If you have a blog on your site, or if a blog is essentially your site, and all you do is publish creative content about your areas of interest, you’re not even covered by the new regulations.

No worries.

No. 2 – Are You Promoting Someone Else’s Products or Services?

If you promote or pitch someone else’s products or services on your blog, there are 2 key requirements under the new regulations:

• disclose “material connections” — you must disclose all incentives you receive — cash, gifts, benefits, etc. – for promoting or pitching the product or service, and
• disclose typical results — you can’t get away any more with small print disclaimers such as “results not typical”; you’re now required to provide a more complete and forthright picture of what can be reasonably expected from a product or service.

If you’re a violator, you could be fined up to $11,000. In addition, you could be held liable for false, misleading, and unsubstantiated statements.

This all sounds like a great win for consumers; however, It doesn’t take much creativity to imagine horror stories with the “material connections” requirement.

Example: suppose you’re a book reviewer. Book publishers routinely send you free books to review. If you fail to disclose that the book was free in your review, will you be fined $11,000? Technically, your failure to disclose the free book would be a violation, but would you be fined? That’s anyone’s guess. If you’re not fined, and someone else in a similar position is fined, is that selective enforcement? As you can see, there’re a lot of potential problems with well-intentioned, but overbroad regulation.

No. 3 – Do You Recruit Other Bloggers To Pitch Your Products or Services?

If you recruit other bloggers to pitch your products or services, such as affiliates, you’re an “advertiser” under the regulations. As an advertiser that sponsors endorsers, under the new regulations you’re required to:

• provide guidance and training to ensure that statements made by your affiliate-bloggers are truthful, not misleading, and substantiated, and
• monitor your affiliate-bloggers and take steps necessary to stop the publication of deceptive representations when they are discovered.

The new regulations apparently embody the concept that advertisers can be held liable for the endorsement-related sins of their affiliate-bloggers. The FTC stated: “It is foreseeable that an endorser may exaggerate the benefits of a free product or fail to disclose a material relationship where one exists. In employing this means of marketing, the advertiser has assumed the risk that an endorser may fail to disclose a material connection or misrepresent a product, and the potential liability that accompanies that risk”.

Legal scholars are now debating whether this new liability exposure for advertisers is in conflict with a well-established legal defense provided by a federal statute (47 USC 230(c)(1)), which reads: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” In simple terms, this statute has been interpreted to mean that Party A is not liable for Party B’s online content.

Has the FTC overlooked 47 USC 230 in its haste to regulate? The courts will have to sort this out. Only time will tell.

Conclusion

The FTC was well-intentioned in its new blog-related regulations. Protection of online consumers is a worthy undertaking.

However, overbroad regulations, particularly if they are in part contrary to well established legal precedent may create as many problems as they solve.

One thing is clear, however — if you fall under No.s 2 or 3 above, protecting yourself from unexpected legal liability should be a high priority.

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Leading Internet, IP and software lawyer Chip Cooper has automated the process of drafting website documents for small websites with his MyLegalFirewall website documents drafting service. Discover how quick, easy, and cost-effective it is to determine which legal documents you need, draft them online, and claim your FREE Special Report, Determine Which Legal Documents Your Website Really Needs, at ==> http://digicontracts.com/kits/firewall.aspx

16 Things Every Website Absolutely, Positively Needs To Know About Website Legal Compliance

By Chip Cooper in Featured

I talk to a lot of owners of small websites — entrepreneurs getting started with new businesses or re-doing existing sites on the Web — and most of them have a profound lack of understanding regarding the scope of legal regulation they face.

What’s worse, most don’t have any idea of their exposure to legal liability.

Why Aren’t Website Owners Aware of Website Legal Compliance Requirements?

I believe the lack of awareness and understanding is due to several factors:

• most small website owners don’t have an Internet attorney; most don’t even feel the need for one, and the ones who do, don’t know how to find one they can trust;
• most website developers don’t inform their clients of the need for website legal compliance;
• website regulation developed without fanfare; to date, there is no federal privacy statute of general application that would have been highly publicized at the time of passage;
• privacy and data security regulation has developed in piecemeal fashion in the form of state statutes (with California leading the way); federal jurisdiction was not created by any Internet-specific statute – the Federal Trade Commission (FTC) assumed jurisdiction for enforcement of privacy and data security violations by claiming jurisdiction (successfully) resulting from its authority to regulate false and misleading claims under Section 5 of the FTC Act; and
• despite press releases by the FTC regarding claims filed against websites, the message is just not getting through to entrepreneurs; for example, in the last 3 years, the FTC has settled with fourteen businesses over inadequate data security for personal information with substantial fines levied in some cases, and the FTC’s aggressive enforcement has continued into 2009 with two new actions filed in the first two months of 2009.

So, given the factors listed above, it’s understandable why most entrepreneurial website owners aren’t aware of the need for website legal compliance. However, website owners won’t be able to plead ignorance. The cliche you’ve heard before is true – “ignorance is no excuse”.

16 High Risk Activities That Indicate The Need For Website Legal Compliance

There are certain website activities that are now very high risk – and indicate the need for legal compliance measures. They include:

1. collection of any single element of personal information; for example, if you collect merely an email address for a sign-up form for product information, a newsletter, or a downloadable report, you have entered an area that is highly regulated – and which presents a very significant exposure to legal liability;
2. collection of credit card information;
3. failure to operate a secure server that stores personal information;
4. failure to identify and assess internal and external risks to the security of personal information;
5. failure to monitor the effectiveness of security of personal information and update security measures as indicated by changes in website operations;
6. offering monthly subscription or membership payment models, or any payment scheme where payment is made over time after the delivery of the product or service;
7. sharing of personal information with others for purposes of direct marketing;
8. permitting third party service providers such as website maintenance and SEO service providers or hosting service providers to have access to the internals of your server;
9. transmission of personal information outside the website’s secure system or across public networks; Nevada and Massachusetts both have statutes regulating these activities;
10. operation of a blog or forum that permits users to upload text or files;
11. operating a website that targets children or at least by virtue of graphics, text, and products or services would be attractive to children under 13;
12. serving third party cookies (e.g. Google Analytics);
13. serving behavioral ads (e.g. Google’s AdSense);
14. appointment of online resellers or affiliates;
15. use of a competitor’s trademark in keyword-triggered ads; and
16. “borrowing” someone else’s privacy policy without detailed analysis of how it fits your own specific business and marketing practices.

Make Website Legal Compliance a Top Priority

If your website engages in any of the risk factors listed above, website legal compliance measures are required — and compliance should become a top priority ASAP.

The legal liability for failure to comply can be significant.

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Leading Internet, IP and software lawyer Chip Cooper has automated the process of drafting website documents for small websites with his MyLegalFirewall website documents drafting service. Discover how quick, easy, and cost-effective it is to determine which legal compliance documents you need and to draft them online, and claim your FREE Special Report, Determine Which Legal Documents Your Website Really Needs, at ==> http://digicontracts.com/

Behavioral And Keyword-Triggered Ads — Legal Update For Hot-Button Internet Advertising Issues

By Chip Cooper in Featured

Safire’s New Political Dictionary defines “hot-button” as follows: word or issue that ignites anger, fear, enthusiasm, or other passionate response.

Safire’s definition fits two Internet advertising issues – behavioral and keyword ads – perfectly. Two developments in the first few months of 2009 show how these hot-button issues are developing, and how they may ultimately impact Internet advertising in a fundamental way.

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