Almost every business has a presence on the internet these days, and this presence typically manifests itself in the form of a website.
Operating a website provides businesses with immense access to individuals and markets across the world. Indeed, a website is nearly indispensable to the operations of a business.
Yet, operating website is not without its own legal risks as well. In fact, the risks that accrue to operating a website could well be more than what you would expect.
In this article, we examine 5 key legal risks behind operating a website, and how these risks may be managed.
Risk 1: Personal data risks
Businesses often collect and process individuals’ personal data for the purposes of their operations, and businesses often use websites to collect personal data. Indeed, personal data may be crucial to the operations of a business.
Yet, the emergence of high-profile data breaches in recent years has resulted in increasing clamours for a greater emphasis the individual’s right to privacy. This has resulted in an increasingly strict data privacy enforcement climate across the world.
This means that businesses that rely on websites to collect and process personal data may face hefty sanctions if they fail to comply with data privacy law and regulations.
One key measure that businesses can adopt to mitigate the risks arising from data breaches is to publish a legal notice on their websites requesting for users to provide their consent to the business collecting and/or processing their personal data for specified purposes.
This is on the basis that as jurisdictions seek to adopt a co-ordinated approach towards data privacy enforcement, one concept holds true across data privacy regimes worldwide – the requirement for consent.
Risk 2: Third party content
It is often that websites contain material posted by third parties (e.g. reviews) or links to external web pages. While it may be necessary to publish third party content or links to external sites to facilitate business activities, there is a risk that such content or external sites may contain information that is false, offensive or even malicious in nature.
Under such circumstances, the business that operates the website may run the risk of being liable of making false/offensive statements, or even perpetrating the transmission of malware. This could lead to heavy penalties and even a damaged reputation.
To exacerbate the situation, the business that operates the website may not have the ability to control the nature of the content being posted by users on its website, or the content of external sites. This means that the business may expose itself to massive risks that it is in no position to eliminate.
Risk 3: Intellectual Property
Intellectual Property (“IP”) is generally defined to mean “creations of the mind” – these include inventions, literary and artistic works, and symbols/names/images used in commerce.
The wide definition of IP means that, more often than not, at least some of website content will constitute IP. These could well include various graphics that are published on the website.
Businesses should be careful to ensure that they do not infringe upon the IP rights of third parties, when they publish content on their website. IP claims could, after all, potentially result in businesses being liable for large amounts of monetary damages.
In this regard, it would be prudent for businesses to ensure that they obtain all necessary licences and/or consents before publishing content/material on their websites.
Risk 4: Orders
Businesses that engage in the supply of goods and services may rely on websites to take orders. Whilst the basic principles of offer and acceptance apply to contracts that are formed online, the issue as to what constitutes an “offer” and/or “acceptance” may be slightly more complex insofar as online contracting is concerned.
Questions that arise may include:
● When will a user be deemed to have made an offer?
● When will the business be deemed to have accepted an offer?
● Does the business have the right to cancel orders?
Given that such complexities may arise over the course of online contracting, it would be prudent for businesses to set out clearly what constitutes an offer and acceptance for the purposes of contracting on their respective websites.
Risk 5: Advertising
Websites are an excellent means of advertising one’s products. After all, businesses can rely on websites to reach customer bases that could prove geographically inaccessible.
Yet, it must be noted that each jurisdiction is likely to have its slew of consumer and advertising laws as well, and a failure to comply with these laws could result in sanctions. Having a wider reach of customers across a greater number of jurisdictions could mean a facing a higher risk of running afoul with consumer and/or advertising laws.
No matter the jurisdiction however, one concept tends to holds true across consumer protection and advertising regimes worldwide – the requirement for advertisements to be accurate (and not misleading).
In this regard, businesses should be careful to ensure that the online advertisements for their products are accurate and not misleading. Measures that businesses could adopt include avoiding the usage of marketing puffs such as “absolutely fit for purpose” and “satisfaction guaranteed”.
We hope that this article has been helpful to you as a start-up trying to make headway in the exciting, yet uncertain, world of commerce.
To aid in your quest to survive and thrive in the complex business world, GLS offers a Total Start-Up Support solution which provides you with all business-critical templates for the price of what most pay for coffee each month.
Needless to say, our solution comes with a 24/7/365 helpline whereby one of our legal professionals can assist you with any queries that you may have.
Check out our full range of e-commerce precedents here as well!
If you liked this topic, you might also like IP 101 - Protecting your good ideas
*The above content does not constitute, nor is it offered as, legal advice of any kind. GLS Solutions Pte Ltd is not a law firm and any support provided pursuant to this entity is not regulated legal advice or legal opinion.