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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/.

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

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