When you think about your business, you probably don’t imagine spending your days reading through legal tips for online entrepreneurs… and yet, if you don’t get these legal foundations in place, you could end up in hot water.
That’s why I asked our own business attorney to share the 3 most important legal considerations for online businesses, so you can get these set up and then focus on the fun stuff in your business!
This is a contribution by Elizabeth Potts Weinstein, Founder & Lead Attorney of EPW Small Business Law.
Every online business needs some basic legal structures in place, whether you are a small blog making money via Google advertising, or a long-time coach taking your successful in-person practice to scale via information products.
Here are some essential legal basics every online business needs to be aware of to keep you out of legal trouble so you can get back to focusing on thriving online!
Do you have a website? You need a privacy policy.
If you gather any type of information from your visitors — including emails or cookies — you need a privacy policy.
Privacy policies are required by the laws of Canada, the European Union, the state of California, and many other countries & states. Even if your company is not located in those places, your website visitors may be located in those countries, so you are required to comply with those rules!
Many websites have an overly simple privacy policy, such as “we don’t share your information with anyone” (that may haunt you later when you go to sell your company), or they use some privacy policy template downloaded from a stock form website. I often see websites without privacy policies; surprisingly even big VC-funded startups!
Privacy policies don’t need to be complicated or restrictive. Think of them as a disclosure. You are sharing how you are going to gather private information from your site’s visitors and use that information — it is most important that you just tell people what you are actually going to do.
You may think you are not gathering information if you aren’t asking for email addresses for a mailing list, but do you have google analytics on your site? Do you use cookies to make your shopping cart function? Then you need a privacy policy!
Typically the policy can be pretty simple, but you may need something more detailed if you are doing Facebook retargeting or if you are sharing or selling information with third parties.
Are you an affiliate? You need disclosures to comply with the FTC.
You may not be formally enrolled in an affiliate program, but you may be “technically” an affiliate according to the FTC.
Anytime you’re doing some sort of joint venture, testimonial, or endorsement, where you might be perceived as being compensated (even if you are *not* being compensated), you want to be clear about that relationship. Be clear about ALL the relationships you have involving your business and anything you write online.
For example, if you are donating money to charity, you want to be clear that you are NOT affiliated with that charity. If you are in a joint venture, you want to make sure that the relationship is not interpreted as a partnership, because you don’t want to be held liable for anything the other party does. And if you do a book review and you got the book for free, or you are sharing an Amazon affiliate link, you need to disclose that information.
If there is any relationship (or someone *might* think there is a relationship), or if you got something for free (or you got paid of course), then err on the side of disclosure!
Do you sell products or services online?
Here’s a quick tip to make sure your customers/clients are bound by your terms of service.
When people buy something from you, you want to make sure that they are bound by the terms you have set, whatever they may encompass–return policy, recurring payments, etc. If your terms are a little link buried in the footer on your site, but are easily found in your store (and frankly no one reads them), your customers will not be bound by them.
In a high-profile case, Zappos.com learned this lesson the hard way when the company lost a lawsuit because of its ‘too subtle’ terms.
Your terms need to be built right into your shopping cart, so it becomes a seamless part of check-out. In some situations–such as for high-priced items or particularly stringent terms–you may want the shopper to check a little box inside your cart or in a pop-up to indicate that they agree to the terms.
A privacy policy, affiliate disclosures, and binding terms of service will go a long way to protect your online business.
Want even more legal tips for online entrepreneurs?
Check out this bonus video for other things to consider when protecting your creative ideas: Should You Trademark the Name of a Company?
Here’s to successful and legal-trouble-free business!
What steps are you going to take today?
Did you realize there were a few missing pieces to your online business legal foundation? Tell us in the comments — what steps will you take next?
