Starting a website and contemplating what legal documents you need? The law is catching up to this new fangled thing known as the web and legal documentation on your site is used to mitigate the risk of doing business online. Let’s take a look at the documentation you absolutely must have on the site as well as additional options that may come into play.
Jurisdiction
Any discussion of the law must first start by defining the jurisdiction being considered. Jurisdiction article refers to the laws of the country applicable to the website. For purposes of this article, we will focus on the laws of the United States, which are applicable to a website based in the country or focusing on the United States market.
Privacy Policy
Privacy law at the federal level of government in the United States can best be described as…laughable. One has to remember the right of privacy is not actually mentioned in the Constitution, but is instead believed to be derived from it by the Supreme Court in the famous Roe v. Wade abortion ruling. This “created right” is hotly contested by opponents, which is why privacy law never really seems to develop at the federal level.
The story with the states is entirely different. California and many other states not only have developed specific laws on privacy, they’ve developed a good number of them. California has seven on the book as I write this and is in the process of passing another three to five in 2013 alone. The laws are tailored to apply to any site with just one member or visitors from California, which effective converts the laws into national standards for all intent. Duties placed on websites under these laws include:
Disclosing what personal information is obtained from members,
Disclosing how said personal information is used and disclosed to third parties,
Providing a specific notice provision on the website for a privacy policy,
Disclosing how the site handles “do not track” signals from visitors and browsers, and
Providing a mechanism for minors to request the removal of posts they’ve made to the website in question.
The end result of all this is creating a privacy policy for a website is not longer a simple matter. Just disclosing you track visitors for Adsense purposes is not enough. A close examination of your data collection procedures must be undertaken and then disclosed in a detailed privacy policy statement. Failure to take these steps can lead to prosecutions by government authorities as well as civil lawsuits.
Terms of Use
Your website will need a terms of use statement. This document is also referred to as the “terms of service” or “terms and conditions” depending upon the party creating the document. Regardless of the name, the important thing to understand is this document acts as a contract of sorts between you and the person using your site. As a result, the terms need to be created carefully and instituted in a particular manner. If these two steps are not taken, your terms can be either invalidated or, worse, contain clauses against your interest that come back to haunt you when you are sued.
Typical topics covered in terms of use include:
Age restrictions,
Applicable law restrictions,
Selection of court system jurisdiction,
Copyright infringement warnings,
Disclaimers of warranties and guarantees,
Licensing defining the use of content provided by visitors,
Copyright notices for the website if applicable,
Trademark notices for the website if applicable, and
Privacy policy inclusion provisions.
The positive news in this area is the terms are written without any negotiation with the visitors to the website. This provides you with an opportunity to craft those terms in a manner that is as beneficial to you as possible. Taking the time to carefully craft your terms is not only a smart move, it is essentially a step you can take to prevent being dragged into lawsuits by users of the website.
Potential Legal Documents
The terms of use and privacy policy form the legal foundation of any website. Nearly every site, however, will require additional documentation. Let’s take a look at the potential issues that may need to be covered on your website.
Disclaimers
If there is a legal concept that is misunderstood more than the disclaimer, I can’t imagine what it is. Let’s try to sort this out right now. A disclaimer is used to qualify a statement, not excuse it. A disclaimer cannot be used to escape liability for making false statements to consumers in an effort to generate sales. It can only be used to escape liability for true statements that are not typical or do not apply to a particular situation. An example can show how this might work.
I create a weight loss pill. I try it on a number of people. Two percent of people who take it lose a staggering 25 pounds in three weeks. The rest lose seven pounds in three weeks. I obviously want to emphasize the people who lost 25 pounds in my web content and marketing pieces. However, there is a small problem. These people only make up two percent of my sample group. Given this, I will need to include a disclaimer in my marketing material and on my website noting the results are not typical and that seven pounds in three weeks is more likely.
Now note something. I have not suggested anything false. There is no “false advertising” here. I can objectively substantiate my claims by showing the FTC or any complaining party that two percent of my sample group lost 25 pounds in three weeks. Given this, adding a disclaimer to my website is an acceptable tactic.
Now let’s consider a second scenario. I create a pill I believe will cure breast cancer. I market it as such. I have no proof anyone has been cured by taking it. I put a disclaimer on my site in small print at the bottom of the template indicating the pill might not cure cancer. Is this going to keep me out of legal trouble? Not a chance. You cannot use a disclaimer to avoid liability for patently false claims.
What does all this mean for a new website? Well, you need to consider the content on the site. If there are services, information or products being offered for which you make specific claims, then one needs to determine if a disclaimer is required. If it is, then the disclaimer must be written and implemented carefully to meet the necessary state, federal and FTC guidelines on false advertising.
DMCA
If your business plan involves allowing visitors to your site to upload anything, you need to become DMCA compliant. “DMCA” refers to the Digital Millennium Copyright Act of 1998. In passing this law, Congress sought to create an informal method for dealing with copyright infringement claims online. Previously, the copyright holder was required to file a lawsuit to protect their rights. With Google receiving nearly 10,000 DMCA complaints a day, you can imagine how clogged up the court system would be without the DMCA.
Copyright infringement is a huge problem online. The cause is rarely malicious. Many people will simply copy and post pictures, music, text and videos without even considering whether doing so violates the copyright of the person or business that created the work.
The last thing you want is to be sued for copyright infringement when launching your new website. The DMCA was created to protect you from this problem. Section 512(c) of the law is the pertinent section at issue here and reads as follows:
(c) Information Residing on Systems or Networks At Direction of Users.—
(1) In general.— A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider—
(A)
(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;
(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or
(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;
[17 USC § 512 - http://www.law.cornell.edu/uscode/text/17/512]
In practical terms, this means websites are given immunity from copyright infringement lawsuits. This is not the full story. To gain and maintain this valuable immunity, a website operator must follow a notice and counter notice process detailed in the law. The process is beyond the scope of this article, but includes:
Publishing a DMCA policy on the website,
Designating a DMCA agent to receive copyright takedown notices,
Responding to takedown notices by promptly removing the contested content from the website,
Following a strict timeline detailed in the DMCA regarding notice and counter notice procedures to facilitate communication between the copyright holder and person who posted the contested material, and
Establish a repeat infringer policy to prevent abuse of the website by parties posting to the website.
Websites typically get into trouble in this area. The owners mistakenly believe they can publish a DMCA policy on their site, designate an agent and they are protected. Nothing is further from the truth. Most website operators are dragged into DMCA copyright litigation because they fail to follow through on their DMCA obligations.
If you run a user generated content website, I cannot emphasize enough how important it is to know the DMCA inside out. This typically means using an attorney to handle claims or work with one of your employees on claims that come in. Whether you use me or another attorney, make sure to use someone familiar with the DMCA process.
Affiliate Disclosures
The monetization of a website is often one of the trickier issues you will run into online. Website operators have come up with a myriad of ways to make a buck. In fact, people have been so creative that the FTC has finally stepped in to establish disclosure requirements website operators must follow. The short and sweet of it is any relationship a website has with an advertiser must be disclosed when content appears on the site that promotes the products or services of the advertising partner.
Let’s consider an example. I create a blog advising people how to build up an email list to support their website. I then mention certain services such as AWeber and I include links to the AWeber site. If I am receiving compensation from AWeber for any leads I send it, I must disclose this relationship. Should I fail to do so, I face a potential $16,000 penalty per violation.
In the past, website operators have simple created an earning disclosure page and linked to it in the footer of their website. This approach no longer is acceptable to the FTC. A careful plan of disclosure within the site content must be created that meets the FTC disclosure requirements while not hurting your click through rates.
COPPA
Does your website target kids under the age of 13? If so, welcome to the legal hell known as the Children’s Online Privacy Protection Act of 1998 – one of Dante’s new circles of hell for website operators.
COPPA is one of those laws created with the best of intentions – protect the privacy of kids online. Between a poorly written law and horrifically poor regulations issues by the FTC regarding the implementation of the law, the cost of compliance with COPPA is in the $18,000 range. This is not a problem for a large site, but it is a huge burden for smaller sites.
From a documentation point of view, COPPA compliance requires the terms of use and privacy policy of the site to be expanded dramatically with significant customization. The language on the site pages also needs to be closely monitored and edited to avoid making any statements that would violate COPPA. You can expect to incur $5,000 to $10,000 in legal fees in just this area before spending money on technical changes to the site required by COPPA.
COPPA is so complex that moving forward with a compliance effort absolutely requires retaining an attorney. If COPPA is an issue for your site, find an attorney in your area who is familiar with the law and can guide you through this minefield of red tape. I handle California clients if you are located in the state.
Product Sales
The sale of products off your site needs to be addressed in your terms. The exact language to be included depends upon what exactly is being sold. For example, the sale of digital product such as apps require an end user license agreement while the sale of custom made products require specific language defining when the sale is considered final.
Returns and refunds are subjects most websites handle incorrectly when selling products online. There seems to be a belief website operators can set whatever return and refund terms they wish. This is incorrect. There are state and federal laws on these subjects. From the FTC 30 day merchandise shipment rules to state laws covering consumer rights, a website needs to define its jurisdiction and create clear, conspicuous legal language that complies with the applicable laws. This is an area where litigation arises often, particularly after the winter holidays if a website fails to deliver gifts on time.
As a general notion, it is important to understand the direct sale of products off a website necessarily require legal language of one sort or another. Again, this is an area where spending a bit of money on a lawyer can keep you out of serious trouble.
Copyright and Trademark Notices
Do you need to publish the magic “C” and “R” notices on your website? Yes, you do. Make sure you are using the symbols correctly in relation to whether you have actually registered the marks by listing them on your site and including them in the terms of use.
The Good News
There is good news? Yes. The legal documentation discussed above all has one thing in common. It is designed to protect you and your rights online. While there are certain requirements you must comply with, doing so is often the difference between being dragged into lawsuit or not. Given this, I suggest you view the cost of preparing legal documentation for your website as an investment in your business, something akin to buying insurance.
In Closing
To sum up, websites need legal documentation in the modern online legal environment. The documents every site must have are:
Terms of use and a
Privacy policy.
Depending on the specifics of the website, additional documentation needed may include:
DMCA compliance documents,
Disclaimers,
Affiliate earning disclaimers,
Children’s Online Privacy Protection Act language,
Refund and return policies,
End user license agreements, and
Copyright and trademark notices.
Contact me today for a free consultation on your website.
Richard A. Chapo, Esq.
@richardachapo
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