10 Simple Steps to Help Reduce Legal Disputes for E-commerce Entrepreneurs

June 30, 1999

One gap in the Government’s Secure Electronic Commerce initiative hasbeen its failure to give clear legal guidelines on e-commerce. So we at ReynoldsPorter Chamberlain want to help to fill this gap by suggesting 10 simple stepsthat budding e-commerce entrepreneurs should take to help ensure that they donot fall foul of the legal uncertainties.

As well as helping to prevent possible legal disputes, the followingguidelines also describe the kind of basic housekeeping needed to maintain goodrelationships with your customers.

1. Display your contractual terms

Details of your contractual terms (and particularly your refund policy andany restrictions or limitations as to guarantees or warranties) should beclearly displayed and signposted to ensure that they are incorporated into allcontracts made with users. Rather than placing contractual small print in anobscure corner of a labyrinthine Web site, ensure that a prominent link is madeto the terms on each page of the Web site (including the home page).

2. Keep personal information secure and comply with data protectionrequirements

Disclose your privacy policy to users and inform users that they sendinformation to your Web site at their own risk. If you accept confidentialinformation such as credit card numbers or personal details, ensure that you arecomplying with data protection requirements and ensure that the information iswell protected from hackers and other forms of unauthorised access.

3. Check the Web site regularly and keep all information up-to-date

Ensure that your information and pricing is up-to-date and keep records ofwhen price changes were made. Depending upon how quickly the information maybecome outdated, it is a good idea to give the date, perhaps even the time, onwhich a particular section of the Web site was last updated. Virgin Airlines wasfined by US authorities for displaying out-of-date information on its Web site.In addition, check your Web site regularly to ensure that hackers have notchanged its contents and that all hyperlinks and functions of the Web site (suchas the facility for users to e-mail you) are operating correctly.

4. Consider information placed on the Web site by other people

If the Web site allows users to post comments or contains other informationover which you have no control, you will need to take extreme care. The recentcase of Laurence Godfrey v Demon Internet Limited demonstrates that suchcomments or information may expose you to liability to a third party fordefamation. To minimise your exposure, state that you do not monitor or exerciseeditorial control over the relevant sections of your Web site and request thatusers contact you if they have any comments or complaints regarding the Website. Where the information is being supplied under an arrangement with someoneelse, make sure that they are obliged to ensure that their information is notoffensive, defamatory or in breach of the intellectual property rights of anyperson.

5. Display contact details and operate an effective complaints procedure forusers

Post details of your e-mail and business addresses and telephone numbers toallow users to contact you easily. Check e-mail regularly and ensure that allcomplaints regarding the Web site are monitored on a daily basis and dealt withpromptly (and in any event within 24 hours) by removing any offending materialuntil the issue has been resolved. If e-mails are not dealt with on receipt,give some indication of the likely response time.

6. Confirm transactions

Once a customer has completed a transaction, it is advisable to send thecustomer an e-mail confirming the transaction and including details of the goodsor services that they have agreed to purchase and the price.

7. Take precautions with respect to hyperlinks to and from the Web site

It is wise to seek permission before placing a hyperlink to someone else’ssite. This is particularly important if you are planning to display theirinformation in a frame within your site or to link to any part of their siteother than the home page or where the terms of their Web site demands thatpermission be sought from the owners. Web site owners should also clearly statethat they do not endorse the opinions expressed by other Web sites to (or from)which hyperlinks have been made and that they are not liable for goods orservices available from such sites. Hyperlinks should be checked regularly toensure that they are working and are not linked to any objectionable sites.

8. Operate effective virus check procedures

If you supply any downloads or distribute ‘cookies’ (to monitor themovements of users) use the latest available virus checking software to ensurethat these are free from viruses. You may also wish to give users theopportunity to reject cookies.

9. Comply with investor protection legislation

The publication of financial information over the Internet is a complex areaand Web site owners planning to publish financial information should seek legaladvice to ensure that they do not fall foul of the Financial Services Act 1986and related legislation. Web site owners should also consider the impact ofinvestor protection legislation if they are planning to link to a Web site fromwhich users may purchase shares. Depending upon the content of both sites, theymay find themselves carrying out an investment activity without being authorisedto do so.

10. Consider the implications of contracting with users from other countries

There is always a risk that information (particularly financial information)published on a Web site which can be accessed by users in another jurisdictionmay fall foul of the laws of that jurisdiction. A related issue is that you mayreceive orders from users living overseas when you only intended to sell withinthe UK. In this context, you may wish to state that the Web site is onlyintended for use in certain countries. At the very least this should act as apractical deterrent for users in excluded countries. If you are aiming toattract customers from overseas you should ensure that the contents of your Website do not breach the laws of those other jurisdictions. Matters to considerinclude applicable consumer credit, investor protection, gaming and lotterieslegislation, local taxation (eg import duties) and whether or not a contractmade over the Internet is binding in those jurisdictions.