Today’s businesses often rely on the use of a website to market their services and/or products as well as convey information to consumers. The Internet has become so pervasive in our daily lives that consumers often turn to it before trying a new restaurant for the first time, to read reviews on a particular product, or to decide whether or not to purchase items from a company that is not a well-known big box retailer. Another advantage of the Internet is that it allows businesses to reach a consumer across the country or around the globe. As a result, businesses develop a niche and specialize in products/services that may not have been able to sustain their business if the company were restricted to a small geographic location.
Before you, as a business owner, take the plunge by setting up a website, you must protect your business from potential legal liability arising from the existence of a website. Such protection can be gained by having a Terms of Use Agreement and a Privacy Policy in place to minimize legal liability. A Terms of Use agreement (TUA) is a contract between the website user and your business that accomplishes the following tasks: (i) specifically describes the intended purpose and use of your website in conjunction with your business; (ii) identifies any pertinent, important contractual terms that are necessary as a result of the Internet relationship; and (iii) clearly identifies the proper forum and venue for resolving disputes arising from a consumer’s use of your company’s website. The TUA can be embedded in a pop-up notification that the consumer must read and affirmatively agree to prior to using the website. Alternatively, the TUA can take the form of a notice posted on the website that automatically binds all users of the website. The specific provisions that should be included in a TUA depend on your business and the purpose and content of the website. For example, if your website facilitates electronic transactions such as those involving the sale of items, the TUA must conform to the Uniform Computer Information Transactions Act.
With the rapid growth of the Internet, privacy issues regarding the disclosure of a user’s personal information through the Internet and data collection practices are a hot topic in legal circles. Owners of websites become privy to consumers’ personal information either by request or by electronic tracking. For example, if the business operates a member-based website which requires a user to sign up for an account, then the business often requires the user to reveal personal information such as date of birth, an address, or credit card number for identity verification. In a face-to-face transaction, a savvy consumer would hesitate to reveal such personal information without the assurance of a Privacy Policy to protect the information from being sold or transmitted to third parties that may use the information maliciously. The same precautions must be in place with the use of a website that captures a consumer’s personal information.
California’s Online Privacy Protection Act requires commercial websites to display a Privacy Policy that includes specific provisions that detail the type of information that is gathered, what the business intends to do with such information, and a description of the process for communicating changes in the Privacy Policy to the consumer, among other things. As part of your website’s Privacy Policy, your business should design and implement security measures to prevent a breach in your website’s security and a procedure to be taken in case of such a breach. It is important that the Privacy Policy accurately reflects security measures and procedures that your business actually follows. If your website simply displays a Privacy Policy that sounds good to the consumer but is not an accurate reflection of your business’ procedures, this leaves your business open to a potential lawsuit.
As you can see from this brief article on website use, a business must take great care when it generates a presence on the Internet. If you have questions about whether your company’s website complies with the applicable laws, then you should contact Ronnie Gipson at (415) 655-6820 or by email at gipson@higagipsonllp.com.
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