Legal Documents for Online Business – Do I need them and Why?

Make sure your online business is compliant with legal standards that apply to you.

Navigating the ins and outs of the online business world is hard enough as it is. Building a brand, finding customers, fulfilling orders, and…legal compliance?! You don’t want to run afoul of Johnny Law, but you’re no lawyer, so where do you start?

The legal aspects of your website can vary based upon the types of products or services you offer. For example, in addition to selling goods or services, you may:

  • Utilize geolocation (GPS)
  • Collect user information
  • Permit users to create an account or publish content on your website.
  • Or, like us, you may be a blogger, internet marketer, or an operator of an information-only website.

Any entrepreneur who engages in these or related activities needs to pay attention to the legal risks involved with the operation of their online business (READ: Why does data privacy matter? A quick guide to CAN SPAM and GDPR). If you don’t, you could risk serious legal repercussions, or worse yet…violating the trust you’ve established with your customers.

Legal risks can arise in different ways based upon your business activities. That is why your first defense must be to have valid and current legal documents and policies published clearly on your website that cover the basic activities of your online business.

What are Legal Documents?

Legal documents refer to any instrument (usually written) that declares, defines, limits, or expands the legal rights or privileges of a person or entity. When applied to an online business, legal documents play an essential role in protecting the interests of business owners and the business itself over the course of its existence. Below are some common legal documents and policies that many online businesses utilize:

  • Privacy Policies
  • Terms and Conditions
  • End User Agreements
  • Copyright Notices
  • Disclaimers
  • Accessibility Information
  • And More…

Legal Documents and Online Businesses

Most online businesses are run via a website (Check out our FREE ebook to learn how to get started with your online business). Much like taking care of your body, you want your website and its users to be healthy and safe. In this way, website legal documents can be likened to vitamins. Everyone knows vitamins are good for the body, but they probably do not know precisely what they do. With the right legal documents for your online business, you can deal with your customers and readers in a healthy way that includes clear boundaries and safeguards against potential threats. Just like vitamins can help your body stay healthy and fight off infections or other illness.

In many ways, the ‘Vitamin C’ of the online business work is the Terms & Conditions (Ts & Cs for short). This document governs the proper use of your website and its products or services. If you sell anything – goods, services or licenses – then the Ts & Cs should include specific details that govern your sales.  At the least, the terms and conditions of service or sale would discuss the basic disclosure obligations and include a disclaimer of liability. They should also ensure compliance with applicable consumer protection legislation.

Ts & Cs can also help to build trust with your customers, and therefore help improve the health of your online business. Building trust leads to loyalty. Loyalty leads to purchases and additional participation in your business activities. Having Ts & Cs and other legal documents clearly visible and acknowledged on your website can help build that trust with your audience.

Legal Documents; Compulsory or Not?

There are also some vitamins that that help support normal bodily functions, but may not be completely necessary. In the same way, some documents are nice to have and offer you protection, but are not required by law or benefit the proper function of your business.

For instance, having a Privacy Policy is mandatory by Law, but Terms and Conditions of Service or Sales are not. But in many cases, both are vital to your business’ health. Privacy Policies are agreements that explain to your users which of their personal data you are collecting and why. This is crucial in the data-sharing environment that we all operate in today.

Privacy Policy agreements are compulsory because you are collecting data that can lead to the identification of the supplier. That means your reader. Your customer. Your business’ lifeblood. In the United States, there are countless laws at the federal, state and in some cases local level that include provisions on the required legal documents.

There are many other regulations that you may need to consider as well. The FTC, the Federal Trade Commission, is responsible for the regulation of data protection on all consumers in the USA.  Their regulations vary, and include The Children’s Internet Protection Act of 2001 (updated in 2013), The Computer Security Act of 1997, and The Consumer Credit Reporting Control Act, among others. These laws regulate what must be disclosed in these legal documents by businesses falling within very specific circumstances.

Some common scenarios and their potential legal documents are listed below

  • If you are selling information products or eBooks, or you send emails to a list of readers, then you need to include a Disclaimer and Terms of Use Agreement in your information product that includes legal language to protect you from warranty liability or other damages.
  • If you put up any kind of content for viewing, then you should include a Copyright Notice – though not required, it is a good way to stop visitors from “borrowing” your materials.
  • You must disclose if you give out any cash, gifts, coupons, free products, etc. to customers or endorsers reviewing your products or services on your website.
  • You also must disclose if you on the receiving end of such a relationship, such as an affiliate or blogger that reviews third-party products or services.
  • If you make any ‘results-based’ claims on your website regarding your products or services, you also must disclose and disclaim as needed. Think of a ‘results may vary’ statement.

Getting the Right Legal Documents

When thinking about your legal documents, consider the health of your business. By taking the time to think about the various elements of each document, you are setting the right foundation for your business. To be on the safe side, we will always advocate for proper legal counsel if you’re unsure. Much like you would seek out a doctor for professional advice about your health, a lawyer, accountant or other professional may be worth a visit. There are also lots of online resources where you can find free templates online to serve as a starting point. We cover the importance of professional advice and link to lots of helpful online resources in our FREE ebook: The Beginner’s Guide to Growing your Online Business Idea.

You should also remember that the laws governing these documents are fluid and subject to change. Hence, to reap the rewards that a successful online business can bring, you need to stay informed and protect yourself and your business.

There you have it; the basics you need to know about getting the right legal documents for your online business.  The proper legal documents are an easy way to avoid common legal potholes that hinder many online startups. They can also provide invaluable when navigating customer disputes and issues that can drain your business and may result in costly legal tussles.

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