Article Categories

• Advertising
• Affiliate Marketing
• Article Marketing
• Blogs & Podcasts
• Branding
• Business
• Cloud Technology
• Ecommerce
• Email Marketing
• Facebook
• Google
• Keywords
• LinkedIn
• Linking Strategies
• List Building
• Local Search
• Marketing
• Miscellaneous
• Mobile Applications
• Page Rank
• Pay Per Click
• RSS
• Sales Copy
• SE Optimization
• SE Positioning
• SE Submission
• SE Tactics
• Search Engine Marketing (SEM)
• Security
• Social Media Marketing
• Social Networking
• SPAM
• SPN Featured Articles
• Technology
• Video Marketing
• Virtual Office/Telecommuting
• Web 2.0
• Web Design
• Web Development
• Webmasters
• Website Promotion
• Website Traffic
• WordPress
• Writing

SiteProNews Blogs

• Editor's Corner
• Darren Dunner
• Jerry Bader
• John Sylvester
• Kalena Jordan
• Mel Strocen
• Titus Hoskins

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.

---

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”.

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.

---

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.

© Copyright 2012 All rights reserved. Jayde Online, Inc.

Home Newsletter Archives SEO Forums Webmaster Tools Webmaster Resources Link to SPN Top SEO Tools Website Templates SPN Partners Contact Us Privacy Advertise

ExactSeek SiteProNews MetaWebSearch SPN Videos EzineHub ISEDN DropJack NewWebDirectory.com SEO-News SEO-News Forums Blog Search FreeWebSubmission SmartWebGadgets