Undoubtedly, a great deal of time, effort and expense went into the design and launch of the Web site for your business. Ideally, prior to launch, you had ensured that your site was fully operational and functional, the proper terms of service and privacy policies were adopted, and both the site and user information were properly secure. Additionally, you should have obtained all necessary consents and licenses from third parties for incorporated material as well as taken steps to adequately protect your intellectual property rights in the materials presented on your site.
Failure to do so could result in severe monetary and nonmonetary penalties and punishments, subjecting you or your business to fines, takedowns, audits and investigations.
Smart Business learned more from Susan K. Chasnov, senior counsel at Stubbs Alderton & Markiles LLP, about minimizing these risks by undertaking a Web site review or audit on a regular basis.
When should I review my Web site?
Ideally, any needed updates should have been implemented in real time with changes in the site, law or applicable regulations. Actually doing so is unlikely, however, particularly if your business and Web site are rapidly evolving, highly interactive or complex. Making reviews a regular calendared event will help to ensure that matters that were missed during the year are corrected and avoid future liabilities.
You should also consider reviewing your site any time you implement a significant new service such as adding a messageboard or chat function, offering items for sale, or incorporating third-party content. These changes will necessarily require an amendment to your Web site policies.
Should I have any particular concerns based upon my line of business?
A variety of federal, state and industry-related regulations and requirements may govern your Web site based upon your line of business. Failure to comply with current industry-based regulations could subject your business not only to significant penalties for noncompliance, but also the time and expense of responding to regulatory inquiries and audits. Some industry-based areas of concern include:
- Broker dealers, financial advisers and other securities industry companies. These sites are subject to regulation by FINRA, the SEC and state regulatory authorities. These regulations provide rules and restrictions regarding, among other things, advertising, sales literature and other communications, and the retention of public communications. They also require that certain disclosures and disclaimers are included within the site.
- Web sites directed toward children. Your site will need to be in compliance with the Children’s Online Privacy Protection Act (COPPA), a federal law enforced by the FTC regarding the collection and use of children’s personal information.
- Public companies. Subject to SEC regulation, public companies are required to post certain information to their site regarding their business for the benefit of investors pursuant to SEC rules and regulations including copies of proxy statements, annual reports and other SEC filings.
- Web sites providing for the sale of goods. Whether you sell goods directly or through links to third-party retailers, your site will be subject to applicable federal and state consumer protection, sales, and tax laws and regulations as well as any requirements of third parties used to process sales, payment and shipping.
What are some significant changes from the past year?
Web sites and the legal and business matters related to them evolve continually over time. Every year, advancements and developments occur in case law regarding the interpretation of Web site rules and regulations. In just this past year we have seen significant developments in many areas that may be of concern to your site as well. For example:
- In June of this year, a federal court in Texas held that a mandatory arbitration clause in a Web site’s terms of service was unenforceable because the company could amend the terms of service unilaterally. An arbitration provision may be highly important to your company to minimize class action litigation risks and the law in this area is constantly evolving and varies from jurisdiction to jurisdiction. If your terms of service are not updated in this regard, your arbitration provision may be unenforceable.
- Facebook’s change in Web site terms and related privacy implications was a hot topic this year. At issue was the ownership of materials contributed by users: Should Facebook acquire any rights to use photos, messages, posts, etc. contributed by its users and should those rights be retained after users terminated their account. It may be beneficial to review your policies in light of these discussions and the feedback provided by users to minimize future disputes with your end users.
- As of Jan. 1, 2009, all public reporting companies are required to post their proxy materials on their Web site, making them available through the time of their shareholder meeting. The new SEC regulations also require that the Web site must be maintained in such a way as to not infringe on the anonymity of a person accessing it, i.e., cookies that violate anonymity may not be installed and IP addresses may not be tracked.
You should consult with a qualified attorney and your advisers to determine whether you need to address these or any other matters to ensure your site is compliant.
Susan K. Chasnov is senior counsel at Stubbs Alderton & Markiles LLP. Reach her at (818) 444-4524 or firstname.lastname@example.org.