If you’re anything like the average Internet Marketer, you probably haven’t spent a whole lot of time keeping up-to-date with the laws that apply to your online activity. It usually takes an irate customer and the threat of a lawsuit to make us think about whether we’re protected sufficiently under the law. By then it’s probably too late.
The consequences of doing nothing
Let’s look at the potential consequences if you do nothing to ensure your business is compliant. You might get sued by a dissatisfied customer. You might get sued by several dissatisfied customers armed with a relentless consumer advocate lawyer who doesn’t like the way you’re doing business online. The government might launch an investigation into your industry and all its practices – the biggest fear among all Internet marketers, newbies and pro’s alike.
If the government means business – and they usually do – you can end up losing your business assets and having your bank accounts frozen. And unless you started your business with the right structure, you could lose your personal assets too. Best-case scenario, these situations tend to be settled with a very large fine from your pocket and a promise never to be naughty again. Is this a risk you can afford?
The cost of being compliant
Internet marketers who are already making six figures are of course more than willing to shell out for legal advice to protect a thriving and profitable business. Done correctly, compliance requires customised legal advice and legal documents prepared by a solicitor who actually knows the latest Internet law. Getting your business protected proactively is costly but probably not as expensive as the damage-limitation you’ll have to do if something goes wrong without protection.
For those of us who need to think twice about this kind of expenditure, compliance is more of a business judgment. You need to risk-assess your industry and your business. Ask yourself, “How likely is it that I am going to be sued? If so, what are the consequences? Is it X amount? Am I going to lose everything? What’s going to happen?”
Am I safer from the long arm of the law if I run a business from home?
How likely is it that a home-based business owner is going to be targeted for non-compliance? It depends on your content. If your website purports to sell a cure for AIDS or offers illegal products like firearms, there’s a good chance that you’ll get into a lot of trouble, and will even be arrested.
If you’re selling something that’s deceptive or unethical but isn’t illegal, like get-rich-quick products, there’s a slightly lower risk of being hauled up for non-compliance. However if your target market includes ‘sympathetic’ consumers such as stay-at-home mothers, children, the elderly or other segments that government agencies are keen to protect – you’re a lot more likely to get squashed if you step out of line legally speaking.
Reducing your risk without breaking the bank
Many online entrepreneurs simply cannot afford the professional services fees involved in becoming compliant. If your budget can’t stretch to an experienced Internet lawyer, it’s going to be a case of self-help:
- Start by purchasing legal website templates that have been prepared by a credible Internet legal expert.
- Educate yourself on the do’s and don’ts of online marketing by reading up on official government and industry websites so you’re at least aware of the fundamentals of what you can and can’t get away with.
- Check out the plethora of free online resources for business owners: government websites, consumer protection bodies and trade organisations and professional institutes.
What about businesses that serve international markets?
Website owners should ideally be compliant with laws in every jurisdiction in which they sell products or services. Many large companies have separate websites for each country where they do business: Amazon for example. Realistically though, most home business owners can’t afford to do this when they start out. Many chose to protect themselves in the country in which they are based and/or in the country where most of their customers are.
Many companies aim to comply with US laws since the US not only has a large number of customers but also aggressive government agencies and consumer protection attorneys that frequently pursue cases against foreign sellers. Countries with smaller markets present a lower risk of lawsuits. Minor markets are often ignored in terms of compliance, at least temporarily, until the business grows to a point where it makes economic sense to address every risk.
Think You’re Untouchable?
Let me give you an example of how a country’s e-commerce law can reach far beyond its geographical boundaries.
A few years ago an Australia-based British citizen violated US federal e-commerce laws by conducting illegal online marketing to US customers.
He was of course unaware of the fact that a free trade agreement between the US and Australia included an extradition clause. The United States used that clause to request that the Australian government extradite the offender to the United States where he was prosecuted for violating US law without ever having set foot in the US before.
He was duly arrested in Australia and hauled to the US where he pled guilty, and is now serving a five-year prison sentence.
Meet Michael E. Young, J.D., LL.M.
Attorney & Counselor at Law
I admit it. I’ve been a geek since I was a kid. I started writing basic programs on an Atari 400 and by the time I was a senior in high school, I’d started programming in COBOL. Even when I went off to law school, I spent a lot of time online with Bulletin Board Systems (BBS) and this was obviously before surfing the web was popular.
In 1996 I started picking up Internet legal clients drawing up contracts for web design, hosting (there were a lot of small hosts back then) and for operating what used to be called cyber malls, where you could buy a page on somebody’s domain – the equivalent of a mall store.
Over the years, I’ve been fascinated with ecommerce both from a business standpoint and as an Internet lawyer helping others protect and grow their businesses. I understand myself as a business owner and I understand the nuances. I like to help others do the same thing and achieve success to boot.
By Michael E. Young, J.D., LL.M.
This article was originally featured in Mike Filsaime’s print newsletter, “MDC Monthly.” You can get a free trial copy shipped to your door by clicking here.