DMCA Safe Harbor Registration Deadline Is Fast Approaching

picture of letters DMCA on deck to accompany post about DMCA digital safe harbor registration
57854715 – the acronym “dmca” is lined with gold letters on wooden planks. 3d illustration image

Do you want to be held responsible for other people’s intellectual property missteps? No? Then register for the DMCA Safe Harbor program at dmca.copyright.gov by December 31, 2016. People who previously registered by mail must re-register using the online system. Need help? Contact Kelly / Warner.

Mandatory Online Registration For DMCA Safe Harbor Program

The U.S. Copyright Office changed the DMCA agent registration process. Previously, online service providers could mail in their registration requirements. Not anymore.

By December 31, 2016, all parties wishing to maintain their safe harbor status must register using the online system at dmca.copyright.gov (link doesn’t go live until Dec. 1, 2016).

The DMCA Safe Harbor Provision

The Digital Millennium Copyright Act (DMCA) governs online intellectual property in the United States. Section 512(c), commonly known as the “Safe Harbor” program, outlines how ISPs can protect themselves from third-party intellectual property liability.

To put it another way, the DMCA Safe Harbor program is why authorities don’t punish Google when *John Doe* posts a pirated film on YouTube.

DMCA Designated Agents

The DMCA Safe Harbor program isn’t an automatic protection bestowed on all websites. To qualify, every three years, ISPs must formally designate and register an agent — typically an attorney — who acts as the receiver for all site-specific intellectual property notifications and takedown requests.

What happens if you don’t register a DMCA agent? Authorities could hold you responsible for users’ intellectual property foibles. So, if you’re an OSP, and you don’t want to pay the price for users’ actions, register for the DMCA Safe Harbor program.

Amazon Sues Over Fake Reviews: FBA News

Picture of fake dollar bill to accompany a blog post about Amazon sues over fake reviews

Amazon Does Not Suffer Fools Fake Reviews

Amazon sues over fake reviews, and actively engages courts to enforce its “zero tolerance” stance. Recently, the company filed yet another lawsuit against several phony feedback facilitators.

Amazon Sues Over Fake Reviews

In the past year alone, the online retailer has already sued hundreds of businesses and individuals who create and deploy fake reviews. (You can read about other instances here, here, and here.)

Why Does Amazon Hate Fake Reviews?

Amazon — (and the Federal Trade Commission, for that matter) — views fake reviews as an act of unfair competition. Or, in legalese, buying fake reviews violates Section 5 of the FTC Act because the practice qualifies as an intentional attempt to mislead consumers.

Amazon explained its position to TechCrunch

“Our goal is to eliminate the incentives for sellers to engage in review abuse and shut down this ecosystem around fraudulent reviews in exchange for compensation. As long as this type of abuse exists, we will continue to take enforcement and legal action against sellers participating in fraudulent reviews.”

Discount-For-Review Programs Are Also Against Amazon Policy

The news comes in the wake of Amazon’s announcement to purge the site of incentivized reviews (exception: books).

What does this mean for e-commerce entrepreneurs? In all probability, traditional advertising will make a triumphant comeback.

Is Amazon Hamstringing Startups?

In addition to investor cynicism, Amazon’s recent crackdowns have sparked a concern flame in the e-commerce industry. Is Amazon, in a way, raising the barrier of entry way too high, by ultimately forcing startups to outlay a larger initial marketing spend?

Fake Reviews v. Discount-For-Reviews: Both Are Now No-Nos on Amazon

What is the difference between fake reviews and discount-for-review programs? The former conspicuously violates Federal marketing regulations; the latter is (perhaps, it’s now more accurate to say, “was”) an enormously helpful startup marketing tool — which also spawned an entire promotional services niche, feedback facilitation.

Or, to put it simply: discount-for-review programs helped grow the online business economy.

Difficult But Necessary?

On account of Amazon’s no-holds-barred approach to exterminating solicited reviews, a big e-commerce question now looms: Do Amazon’s actions fall into the “difficult-but-necessary” category? Did company quants crunch numbers and discover that its third-party selling programs were ballooning at a breakneck — and unsustainable — speed, flooding the platform with potentially problematic digital detritus?

Because here’s the thing: Amazon is currently the top-dog, and as such, greatly exposed. It must be careful. Other online retailers are patiently crouching in the tall weeds, waiting for the perfect opportunity to pounce — and that opportunity could be Amazon’s deteriorating respectability. After all, if the platform becomes synonymous with counterfeit goods and phony reviews, the public will start to look elsewhere.

Adjust To Survive

Now, does all this news spell doom and gloom for FBA sellers? No. Surviving amounts to adjusting. Brands and marketers should consider:

  • Launching products at a low price, along with a well-executed customer satisfaction email campaign, which encourages consumers to leave reviews.
  • Readjusting budgets to include other types of “Off Amazon” marketing efforts.
  • Adding an unexpected packaging surprise. Why? Because people are more likely to leave a review if they’re delighted by an unanticipated treat. This tactic also has the added advantage of acting as a counterfeit deterrent.

Need Advice From An Amazon E-Commerce Attorney?

Our firm helps business owners overcome online review challenges, in addition to other Internet business issues, like account suspensions, counterfeiting, and intellectual property troubles.

Source

Shopify and Stripe: Account Troubleshooting and Legal Advice

shopify and stripe
Let’s take a few minutes to review the Shopify and Stripe alliance. We’ll:

  1. Go over some background info about both companies;
  2. Examine a few issues, like the prohibited businesses list; and
  3. End with some solutions for commonly reported merchant challenges.

Shopify and Stripe At A Glance

Shopify’s Origin Story

Several years ago, some Canadian snowboarding enthusiasts hopped on the startup train. Their goal? To sell equipment online. But our intrepid entrepreneurs didn’t want a generic online store:

They wanted to stand out; they wanted unique!

To achieve said goal, instead of using a standard payment gateway, the group developed a custom solution.

Quickly, they realized that selling snowboarding stuff was great and all, but releasing their skookum e-commerce platform might be even better.

Thus, with goal in mind, the group regularly convened at a coffee shop. And one day, the phoenix that is Shopify rose from a puff of java-infused, brain fumes.

So, who uses Shopify? People who want a highly customizable solution for their online stores. What do professional critics think of Shopify? CNET described the platform as “clean, simple, and easy-to-use.”

Shopify and Stripe Alliance

Who is Stripe?

HQ’d in Ireland, John and Patrick Collison founded the company in 2010. Simply put, Stripe is payment gateway processor for individuals and businesses without private merchant accounts . It’s similar to PayPal.

Stripe is Shopify’s preferred checkout system.

Common Shopify-Stripe Issues

Here’s the frustrating truth: in the world of online payment processors, chaos is the default setting. Problem-free payment processors fall into the same category as unicorns. A kajillion factors can affect a single transaction; problems are inevitable.

In the world of online payment processors, chaos is the default setting. Problem-free payment processors fall into the same category as unicorns. A kajillion factors can affect a single transaction; problems are inevitable.

Caveats in place — here’s a list of common user complaints about the Shopify and Stripe framework:

  1. No Phone Number: Stripe famously doesn’t have a telephone support number (confirmed at the time of writing) — which is a sore point for many people. In defense, Stripe says e-mail support systems are way better than call centers — and, to be fair, many of their customers agree, citing Stripe’s ticketing system as superior to most.
  2. Chargeback Issues: Is Stripe a chargeback circus? Some people think so. Online response representatives for the company disagree, arguing that chargebacks are an unfortunate part of today’s marketplace, but promising to work closely with vendors to resolve chargeback disputes.
  3. Uncaptured Transactions: Some businesses reported an increase in “uncaptured” or failed transactions that coincided with a move to Stripe. Remedying this problem, however, often just involves a few setting adjustments (see tips section below for possible solutions).
  4. Money Transfer / Frozen Payment Issues: Like any payment gateway, the STRIPE-to-bank-account transfer process can take a tad longer than one would like. Again, this is true for nearly every available option. Hiccups, unfortunately, occur.
  5. Credit Card Blacklist: Stripe takes the “credit card blacklist” seriously. If you inadvertently land on the dreaded directory, Stripe may suspend your account till it’s sorted. Don’t think you belong on the list? Enlist a professional fixer to clean up the matter on your behalf.
  6. Blame Game: Some users accuse Stripe and Shopify of playing blame-hot-potato when it comes to various “authorize only” malfunctions.

Prohibited Business Issues

Products sometimes land on the “prohibited businesses list.” In this section, we’ll review some legal basics and discuss potential solutions.

What Is The Prohibited Business List?

The Prohibited businesses list is exactly what it sounds like — a list of businesses that either Shopify or Stripe bans from being sold through their respective platforms. Foodstuffs, supplements, make-up, formulas, cookware and potential weapons are routinely added to the blacklist.

So, what happens if your product lands on the list? In extreme cases, your online store may simply stop working. At that point, enlist a lawyer to negotiate a reinstatement. An attorney can best explain the necessary steps — based on the specifics of your situation — to get the product compliant — and off the list — ASAP.

The Product Blacklist Constantly Changes

The trickiest thing about the Prohibited Businesses List is its instability; it changes, without notice, on the whims of credit card companies.

Products Most Likely To Land On The Prohibited Businesses List

  • Vitamins
  • Herbs
  • Supplements
  • Weapons and Potential Weapons (including knives and certain fishing gear)

Please don’t read this wrong, not every supplement is doomed to a blacklisted retirement. Just be aware that supplement sales come with an additional set of regulations and considerations.

Please don’t read this wrong, not every supplement is doomed to a blacklisted retirement. Just be aware that supplement sales come with an additional set of regulations and considerations.

Increased Number of Chargebacks After Switching To Stripe

A number of people report an increase in charbacks after switching to Stripe.

Is the criticism fair?

Well, it’s a gray area.

With Stripe, the default privacy setting is “wide open;” users must activate protections. A lot of folks don’t notice the default setting, launch their stores with unsecured payment accounts, and ultimately get burned with fraudulent charges.

With Stripe, the default privacy setting is “wide open;” users must activate protections. A lot of folks don’t notice the default setting, launch their stores with unsecured payment accounts, and ultimately get burned with fraudulent charges.

The takeaway: Manually set security preferences when prepping your Stripe account to avoid a flood of chargebacks.

Clicking “I Agree” Means Absolving Shopify Of Fraud Responsibility

Here’s an excerpt Stripe’s Shopify user agreement:

“You are responsible for verifying the identity of users and of the eligibility of a presented payment card used to purchase your products and services, and Shopify does not guarantee or assume liability for transactions authorize and completed which may later be reversed or charged back. You are solely responsible for all reversed or charged back transactions, regardless of the reversal or chargeback. Shopify may add or remove one or more types of cards as a supported payment card at any time without prior notice to you.”

The agreement also states:

“You acknowledge that you provide this personal information regarding you and yours customers at your own risk.”

So, what DOES all this legal mumbo jumbo mean? In a phrase: Shopify isn’t responsible for bad transactions, nor any personal data problems (hacks) that may arise. Sound sketchy? Perhaps. But nearly all — if not all — payment processors protect themselves in this manner because it’s the right business decision.

Connect With An Online Sales Lawyer

Kelly Warner helps online entrepreneurs. An Internet law firm, we partner with startups, established companies and individuals on issues related to online reputation, e-commerce, marketing, privacy and intellectual property. We’ also assist people with issues related to Shopify and Stripe. To learn more about our practice, head here. Ready to talk? Get in touch today.

Time To Rethink Your Trade Secret Strategy? Legislation is Looming.

trade secret law change

Are you trade secret reliant? If yes, take two minutes to read this post. Why? Well, federal Representatives OK’d a bill that, if fully passed, may impact your intellectual property protection strategy.

Summary of Proposed Trade Secret Law: Addition Of Federal Jurisdiction Privileges

Dubbed the Defend Trade Secrets Act (DTSA), it’s been described as the “most significant expansion of federal law in intellectual property since the Lanham Act in 1946.”

Currently, trade secret governance is a state issue. If, however, DTSA becomes law, certain people could file trade secret claims in federal court. To qualify, potential plaintiffs would have to supply “evidence of actual or threatened misappropriation before a court [could] issue an injunction to prevent it.”

Join or Die! The Supporters Are Saying…

Why alter trade secret standards? The argument goes like this:

  • Back in the day, trade secret disputes were “largely a local matter.” Typical cases involved a departing employee smuggling confidential customer lists to their new job…down the street.
  • Enter the Internet. Many a tech fortune was built on the back of a trade secret (i.e., Google’s infamous algorithm). Or, to put it in cash-money terms: Trade secrets represent trillions of publicly traded dollars!

On account of their exalted economic position, people feel that federal courts are best equipped to handle complex, high-dollar trade secret claims.

Objection! The Opposition’s Standpoint…

Not everyone is cheering for this new trade secret law. Opponents say the measure is superfluous. States, they argue, are well-equipped to handle all manners of trade secret claims. Also, DTSA detractors think the bill’s wording — specifically the phrase “extraordinary circumstances” — is too vague.

Pundits portend a trade secret litigation spike if  politicians pass the law.

Speak With A Trade Secret Lawyer

Trade secrets play a giant role in today’s tech industry. Formulas, algorithms and calculations are at the heart of many startups and established firms.

Our team has successfully handled all manners of trade secret-related situations. A lawsuit isn’t always necessary to remedy a misappropriation. Get in touch today to start reviewing potential solutions.

Article Sources

Gershman, J. (2016, April 27). Congress May Be About to Shake Up Trade Secret Law: Is That a Good Thing? Retrieved June 17, 2016, from http://blogs.wsj.com/law/2016/04/27/congress-may-be-about-to-shake-up-trade-secret-law-is-that-a-good-thing/

IoT Startup City Spotlight: Shenzhen, China

Is Shenzhen poised to become another international startup stronghold?Every so often, we take a minute to highlight a city or country gaining popularity in the startup community. Last time, we discussed Estonia. Today, let’s take a look at Shenzhen — China’s booming IoT haven.

Where is it?

A short 40km north of Hong Kong, Shenzhen was the first city to be declared a Chinese Special Economic Zone.

Generally Speaking, What Drives Shenzhen’s Economy?

The city’s population has steadily grown since 1980. In 2015, Shenzhen’s GDP weighed in at nearly $270 billion.

The city is home to the Shenzhen Stock Exchange (SZSE) and one of the busiest container ports on the planet.

Who Is Flocking To Shenzhen?

Shenzhen is considered the “darling of IoT entrepreneurs from around the world.”

Several big names already landed in the Chinese city. Famously, Zach Smith of Makerbot moved there a few years back. An executive at IoT accelerator Brinc explained why Shenzhen has become an attractive option for the niche:

“Time and time again, IoT startups aren’t able to successfully manufacture their product and nothing beats in-person, hands-on experience and knowledge working with the manufacturer.”

Drone manufacturers are also converging on the city.

Shenzhen-based companies have begun to “westernize” working environments by establishing “campus style” facilities, like Google.

Best Non-Work-Related Benefit of Shenzhen

The climate. It’s never too hot or too cold; typically, the mercury lands between 60 and 84 degrees.

Worst Aspects Of Shenzhen

Oddly enough, Internet access isn’t the best; decent, but not the highest-end. Plus, some people aren’t impressed — or even satisfied — by the cultural and dining offerings. That said, world-class Hong Kong is a short ride away.

Shenzhen In A Nutshell

A manufacturing mecca, Shenzhen is emerging as a hub for the Internet of Things community. For IoT startups, a contact in Shenzhen may be worth considering.

Connect With A Startup Lawyer

Internet law firm Kelly Warner works with tech and online startups. To learn more about our top-rated practice, head here. Ready to talk? Great, so are we. Get in touch today.

Article Sources

Desai, F. (2016, May 7). Innovators Find Internet of Things Paradise in Shenzhen. Retrieved June 16, 2016, from http://www.forbes.com/sites/falgunidesai/2016/05/07/innovators-find-internet-of-things-paradise-in-shenzhen/#7a2854f2552d

Did Louisiana Legislators Ruin The State’s Startup Economy With An Amazon Tax?

Amazon tax state laws

Louisiana officials may have destroyed the state’s startup economy.

Ok — granted — *destroyed* is a bit strong. But Louisiana’s legislators definitely made their state unattractive to e-commerce entrepreneurs by passing Act 22 — a.k.a. the Amazon Tax Bill.

Check out these figures:

  • In 2014, Amazon generated $79.48 billion in online sales.
  • Experts expect the online retail space to grow by 20%, annually, over the next several years.
  • Analysts predict it will be a $523-billion-dollar market — in the U.S. — by 2020.

Do you think Louisiana made the right choice?

What Is An Amazon Tax?

States can collect taxes from companies with a physical presence — or nexus — to a given state. Or, to put it a much simpler way: states can collect taxes from brick-and-mortar businesses, which raises their costs of doing businesses.

But here’s the rub: currently, in about 40% of states, online boutiques aren’t subject to the same brick-and-mortar charges. Internet retailers, in states without the online levies, don’t have to remit state taxes associated with online sales.

(The Amazon Tax issue is, of course, more complicated than the above explanation; but in this post we’re doing broad strokes. If you sell to customers in every state, get with an account or attorney to ensure compliance.)

Why Did Louisiana Opt For An Amazon Tax?

According to reporters, Louisiana legislators needed money to combat a “severe budget crisis.”

What States Have Online Sales Taxes?

At the time of this writing, 29 states have some sort of “Amazon tax.” They include:

Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.

Amazon Won’t Work With Affiliates From SOME States

Each state’s “Amazon tax” is different. For example, Arkansas’ Amazon law has caused discord between the company and state. But, a few jurisdictions away, in North Carolina, the opposite happened; before NC legislators ratified an “Amazon tax,” Amazon didn’t allow NC residents to operate affiliate accounts, but after passing the statute, Amazon added affiliate opportunities for NC residents. Go figure.

Is Amazon The Only Company Affected By Online Sales Taxes?

No, Amazon isn’t the only platform that needs to worry about Amazon taxes. They can also affect affiliate marketers, affiliate networks, online stores, and e-commerce platforms.

Extra Credit: Quill v. North Dakota SCOTUS Ruling Established *Nexus* Standard

In 1992, the Supreme Court of the United States established the “nexus standard” in Quill v. North Dakota. A tax concern case, the question at the center of Quill was whether or not North Dakota could collect levies from a company without a physical presence in — or nexus to— the state. In the end, SCOTUS ruled that “a state can only tax businesses with a physical presence in the state.”

Ultimately, the decision created profit opportunities for e-commerce companies.

Marketplace Fairness Act

Industry associations and traditional retail outlets want lawmakers to pass a federal Marketplace Fairness Act, which would effectively dismantle Quill by replacing the “physical presence” tax standard with an “economic presence” one.

Pro / Con of the Marketplace Fairness Act

Proponents of a Marketplace Fairness Act say it would level the playing field between online and offline concerns.

Opponents argue that states should abolish brick-and-mortar-only taxes to level the playing field.

Get Answers To Your E-commerce Business Law Questions

Kelly Warner is an Internet law firm that works with startups, marketers, and developers. In fact, we’re one of the first firms to concentrate on legalities associated with online marketing and selling.

Founder Aaron Kelly is a preeminently AV-rated attorney, with a 10-out-of-10 on Avvo.com; named partner Daniel Warner has a photographic memory; partner Raees Mohamed has won his fair share of David v. Goliath cases; associate lawyer Hansen Tong has a rocket science background. They’re an online business legal dream team.

Get in touch; let’s chat about your situation and start crafting a solution.

Article Sources

Guy, S. (2016, April 5). Amazon ends its affiliate program in Louisiana over a sales tax law. Retrieved May 10, 2016, from https://www.internetretailer.com/2016/04/05/amazon-ends-affiliate-program-louisiana-over-sales-tax-law

Mire, M. (2016, March 28). Louisiana’s New. Retrieved May 10, 2016, from http://www.thepelicanpost.org/2016/03/28/louisianas-new-amazon-law-raises-constitutional-questions/

Summary of FTC’s Native Advertising Guidelines

native advertisingThe FTC issued a pair of new advertising guidelines — the Enforcement Policy Statement on Deceptively Formatted Advertisements and the Native Advertising: A Guide for Businesses. What are the chief takeaways? Will the “new rules” have a massive effect on current marketing trends?

First Things First: The Current State of Native Advertising

Jeffrey Chester, executive director of the Center for Digital Democracy, aptly described native promotions as “product placement on digital steroids.”
“Product placement on digital steroids.”
Over the years, the practice has become exceptionally popular – and effective – partly because it can be tailored to search behavior. According to the Association of National Advertisers, two-thirds of its surveyed members plan to increase embedded marketing spends this year.

Marketers love it for two key reasons:

  • It’s more likely to be shared.
  • It’s less intrusive than traditional advertising.

So, what, exactly, is “native advertising”? It’s promotional material that mimics the look and feel of a website. “Around the Web” links at the bottom of blog posts – (you know, the ones with the guilty pleasure headlines) – are examples.

FTC Investigation: Is Native Advertising Deceptive?

Marketers may love native advertising, but the Federal Trade Commission– which is responsible for exterminating deceptive marketing – has always scrutinized the practice with a more skeptical eye.

For years, pundits have debated the ethics of “embedded promotions” crafted to look like normal content. Is it misleading? Does it trick users into clicking when they otherwise wouldn’t? The debate has raged, and now, the FTC is adding its 10 cents.

To be clear: the FTC can’t throw people in jail for shirking its guidelines. The Commission is a quasi-governmental agency. Yes, a federal law created the FTC, and yes, a federal law grants it the authority to financially sanction businesses and individuals who engage in “unfair and deceptive” marketing; but no, the FTC’s guidelines aren’t actually laws, per say.

New Native Advertising Guidelines

“People browsing the web, using social media, or watching videos have a right to know if they’re seeing editorial content or an ad.” ~ Jessica L. Rich, director of the F.T.C.’s Bureau of Consumer Protection

What are the important points of the native advertising guidelines:

  • The “net impression” counts.
  • Make it crystal clear that native ads are promotional, not editorial, content.
  • Don’t use the phrase “promoted stories” to demarcate native advertising from *normal* content. “Promoted,” in the eyes of the FTC, is too vague a word and can cause consumer confusion.
  • Native advertisement disclosures should appear in the same frame as the ads themselves; they shouldn’t appear below the ads – especially if a user has to scroll to see them.

Word on the street is that the new native advertising guidelines are clear, helpful and include clarifying images.

How Will Native Advertising Guidelines Affect The Marketing Industry?

Industry people are talking about the FTC’s native advertising guide. And it’s no wonder: some of the biggest content players feast on the stuff. Supposedly, a third of Gawker’s revenue comes from native advertising; Vox Media allegedly has an in-house ad agency to churn it out.

And, of course, opinions about the FTC’s latest native advertising treatise run from A to Z. Some people rolled their eyes and typed dirges about the commission’s investigative inconsistencies; or, in more colloquial terms, “The FTC is so mercurial that its guides are little help.” Middle-of-the-roaders seem to be taking the release in stride, making note of the FTC’s insistence on transparency.

A blog post on Marketing Land offered three predictions regarding the new guides:

  • Some of the bigger native advertising players will either tap-out or incur fines.
  • Native advertising will become less effective.
  • Now that the FTC has weighed in, bigger brands may start using it more.

Work With An Online Marketing Attorney

FBA sellers and online marketers love to work with Kelly Warner. Our team assists with a host of FTC compliance and online marketing issues.

We founded our practice to help entrepreneurs — and over the years have earned top marks. Let’s talk; get in touch today to begin the conversation.

Article Sources

Ember, Sydney. “F.T.C. Guidelines on Native Ads Aim to Prevent Deception.” The New York Times. The New York Times, 22 Dec. 2015. Web. 10 Feb. 2016. <http://www.nytimes.com/2015/12/23/business/media/ftc-issues-guidelines-for-native-ads.html?_r=0>.

Kulwin, Noah. “FTC Issues New Rules for Native Advertising on the Internet.” Recode. 22 Dec. 2015. Web. 10 Feb. 2016. <http://recode.net/2015/12/22/ftc-issues-new-rules-to-native-advertising-on-the-internet/>.

Rodnitzky, David. “Now That The FTC Has Spoken On Native Advertising, What’s Next?” Marketing Land. 12 Jan. 2016. Web. 10 Feb. 2016. <http://marketingland.com/now-ftc-spoken-native-advertising-whats-next-158262>.

ATTN BUSINESS OWNERS: THE FTC NOW FINES FOR BEING HACKED!

FTC can fine for being hacked
Yep. The FTC can fine for being hacked. Not the hackers, but the businesses that are breached.

Is your online security house in order? If not, stop what you’re doing and contact a digital security guru, pronto – especially if you collect and store customers’ personal and financial information. Why? A U.S. court recently ruled that the Federal Trade Commission can pursue companies that fail to sufficiently protect consumer data.

In other words: If someone hacks into your business, YOU could be held responsible and fined into submission. Yes, the FTC can now fine for being hacked!

Wyndham Hotel Hack

The Appeals Court ruling was a result of Wyndham Hotels and Resorts’ data breach from a few years back. The high-profile hack exposed approximately 619,000 records and allegedly resulted in $10.6 million in “fraudulent charges.”

FTC’s Argument In Hacking Case: Company Did Not Do Enough To Protect Consumer Data

When pursuing the case, FTC staffers identified four points of protest. According to available reports, Wyndham allegedly:

  • Wasn’t using an appropriate firewall at the time of the breach;
  • Didn’t encrypt customers’ credit card information;
  • “Failed to address known vulnerabilities”;
  • Maintained a poorly managed network – so much so that staffers weren’t aware which computers were connected to it.

The FTC Can Now Fine For Being Hacked

Though the FTC has been granted new leeway in regards to punishing companies that are hacked, the agency is still murky on what constitutes the “reasonable steps” a company should follow to prevent a security breach.

It’s wise to work with an attorney who handles online privacy and security issues. The mere act of working with a firm looks good in the eyes of the law.

“But, Wait! It’s Not The Company’s Fault!” The FTC Doesn’t Care

In its defense, Wyndham argued that the company “does not treat its customers in an ‘unfair’ manner when the business itself is victimized by criminals.” But the court disagreed, reasoning:

“A company does not act equitably when it publishes a privacy policy to attract customers who are concerned about data privacy, fails to make good on that promise by investing inadequate resources in cybersecurity, exposes its unsuspecting customers to substantial financial injury, and retains the profits of their business.”

The court determined that lack of a privacy policy doesn’t preclude lax security. FTC chairperson, Edith Ramirez further explained:

“It is not only appropriate, but critical, that the FTC has the ability to take action on behalf of consumers when companies fail to take reasonable steps to secure sensitive consumer information.”

Get An Online Privacy Lawyer, Who Deals With Hacking Incidents, On Speed Dial

Some business owners may be peeved about the FTC’s new authority regarding hacks. Understandably. But as they say: there’s no use crying over spilled milk the long arm of the Federal Trade Commission. Instead, it’s best to get your digital security house in order and have a hacking lawyer on speed dial, in the event of a breach.

Contact Kelly Warner’s Internet Law Aficionados

Lawyers Daniel Warner, Aaron Kelly and Raees Mohamed are partners at Kelly Warner Law. A firm that focuses on 21st-century legal issues, Kelly Warner has grown to become one of the preeminent Internet law practices in the country, helping clients with issues related to online privacy and hacking.

To learn more about the firm, please click here. To read more about Kelly Warner’s lawyers, head here. If you’re interested in further reading regarding FTC legalities, please peruse the Federal Trade Commission section of our blog.

If you’re ready to speak with an attorney well versed in online privacy and hacking law, please get in touch. We look forward to sorting any legal challenges you may be facing.

And remember, the FTC can now fine for being hacked, so make sure you have an online privacy lawyer on speed dial.

Article Sources

Bloomberg, J. (2015, August 25). Company Breached By Hackers? You’re Being Deceptive, According to FTC And The Court. Retrieved October 19, 2015, from http://www.forbes.com/sites/jasonbloomberg/2015/08/25/company-breached-by-hackers-youre-being-deceptive-according-to-ftc-and-the-court/

Internet Law FAQs: Top Five

Internet law FAQ
A top-rated attorney answers 5 frequently asked Internet law questions posed by startups.

5 Internet Law FAQs

As a website operator, am I accountable for untrue statements posted by users on my website? Can I be held responsible for users’ defamatory acts?

Under United States law, Internet service providers, Web hosts and interactive computer services are federally protected from third-party defamation liability via Section 230 of the Communications Decency Act. Case law is strong on the matter, and even though a couple of such cases have won in trial court (i.e., Sarah Jones v. TheDirty.com), they were overturned on appeal.

My site sells products geared for adults. How do I protect my company from liability if minors lie about their age and purchases an item from my site?

Age verification has always presented an obstacle to businesses with an online commercial presence. Operators worry: “How is it possible to keep minors off a site? If I fail, will I be held responsible for something I tried to prevent?”

Thankfully, lawmakers do understand the predicament faced by websites that don’t want to cater to users under the ages of 13, 16, 18 or 21 because they don’t want to worry about various age-related federal online privacy regulations. That said, websites that truly don’t want minors interacting or making purchases via their platforms must have certain elements in place to convince a legal body that they took precautions to limit their sites’ appeal to minors.

Online venues that want to discourage underage use of their sites should:

age restrictions for websites laws
Be careful not to make your site attractive to minors if you don’t want them using your website.
  • Be aware of design considerations. The Federal Trade Commission considers a website’s aesthetics when investigating “unfair and deceptive” marketing cases. If your site uses graphics that would appeal to a younger audience, it could be – and has, in the past been – considered an underhanded method to attract minors.
  • Make sure your disclosures are clear and conspicuous. If you genuinely don’t want people under a certain age making purchases from, or interacting with, your site, implement an acknowledgement step. Before any security or check-out process, make sure there is a page in the checkout process that users must acknowledge via an “I agree” click, which clearly states the age policies of the site.
  • Use policies that conspicuously dictate the platform’s age rules. Many website terms of use agreements that are available for free all over the Internet don’t include age provisions. That is why it’s wise to hire an Internet law attorney to draft policies and terms specific to your business and target demographic.

How can I get rid of inaccurate,misleading online posts about my business? Are there actions I can take against the person making the false posts?

fake review lawyer and legalities
There are several legal options for combating online reviews.

As digital-dependency grows, online reputation attacks are also growing more prevalent. To gain a competitive edge, some businesses hire smear trolls to bad-mouth competitors across the Internet. But doing so is a violation of civil law. Hiring reputation assassins who spread false statements of fact, about either a person or business, with the intention of driving clients to themselves, is defamatory, and pecuniary redress is achievable in some cases. But, to win a business defamation or trade libel lawsuit, in a United States court, plaintiffs, at the very least, must prove:

  • That the Defendants made a negligent, false, unprivileged statement of fact that caused material or reputational harm.
  • That the statements were about the plaintiffs.
  • The defendants’ actions can’t be deemed defamatory unless claimants can prove that their detractors acted at least, negligently, or at best, with actual malice.

Another common tactic used to mitigate the effects of false and negative online press is to get pages de-indexed from search engines.

Am I obligated to provide information on my site about me? I’ve been told that all websites must provide personal information about the owner.

Rules and regulations regarding required website policies is a field of law in a constant state of flux. As such, there are many caveats and exceptions. The best thing to do – especially if you run a commercial website – is to have a contract drafted, by an Internet lawyer, specific to your operation. Because remember, not only do you have to worry about state and federal laws, but if you allow users in Europe to makes purchases from – or interact with – your platform, you must adhere to E.U. regulations, too.

website terms and conditions required
Make sure your website has the proper terms of service, privacy and user agreements.

That said, at a minimum, here’s a list of contracts and policies you should probably have on your website.

  • Privacy Policy. If you run a commercial website, a privacy policy is a must. It should outline how and when personal data is collected, plus clearly describe how and if personal data is stored, shared, sold or otherwise transmitted to a third-party. Additionally, language – and features – associated with various U.K. and E.U. online privacy laws should be addressed in the privacy policy of any website that collects user data and allows people overseas to interact with the site.
  • Legal Disclaimer. It’s a good idea to include a legal disclaimer on your website – especially if you’re marketing or selling a product or service via your website. To learn what types of marketing disclosures you need to add to your online privacy policies, consult the links below.
    • Dot Com Disclosures: This link will take you to a list of blog posts about the Federal Trade Commission’s online marketing bible – the Dot Com Disclosures.
    • COPPA: The Children’s Online Privacy Protection Act is the only U.S. Federal online privacy law. It’s important that marketers understand COPPA parameters, as they do have an effect on how digital marketing campaigns are structured and distributed.
    • Gramm-Leech-Bliley: Regulations regarding banking records and any other monetary data must always be respected. E-commerce websites – a.k.a., “commercial websites” – should consult with an Internet law attorney, before launch, to ensure that the site’s policies are correct.

I have installed the latest encryption systems into my site to protect visitors when they make a purchase. If my site is hacked, and personal information is stolen despite the implemented protections, will my company be held liable?

data breach lawyer
In the wake of a data breach, businesses are required to follow certain notification regulations.

Over the past two decades, federal legislators have passed several regulations regarding the collection of personal and financial digital data. They’ve also green lit measures designed to curb online hacking and Internet espionage.

The two main federal laws affecting hacks and their aftermaths are:

  • The Computer Fraud and Abuse Act: Amongst other things, this is the main law used to prosecute people involved in unauthorized digital breaches – a.k.a., hacking incidents.
  • The Gramm–Leach–Bliley Act (GLBA): Also called the Financial Modernization Act, the GLBA includes a section about safeguarding personal financial data. In the event of a hack, certain GLBA provisions may apply. Consult with an Internet lawyer who understands legal breach parameters, and can walk you step-by-step through the post-hack notification process.

In addition to the federal statutes, states have various laws governing digital security breaches and their aftermaths. For example, click here to read about Arizona’s data breach notification law. Best practice advice: have a privacy officer in your corner before anything happens. Establish legal counsel you can contact in the wake of discovering a data security breach. There’s a good chance that having a privacy officer on your side may mitigate resulting government penalties.

Contact Kelly Warner’s Internet Law Attorneys

Internet law attorneys
Kelly Warner was one of the first law firms in the country to focus on cyber law.

Since hanging up the shingle, Kelly Warner has concentrated on Internet law. And we didn’t jump on the tech bandwagon because it was the “in thing” to do.

Instead, we grew up with computers and started programming before we learned to drive.

Like you, we’re wired entrepreneurs and we have invaluable insight into how the e-commerce ecosystem operates.

Contact Kelly Warner about any of your Internet law questions.

Legal Lessons 101: Can I Get An Injunction?

get an injunction lawyer
Just how difficult is it to get an injunction?

Business competition can get ugly. And occasionally, aggressive opponents may cross legal lines when elbowing their way to #1. Our law firm works  with startups, entrepreneurs and businesses who face egregious acts of disruptive marketing, and they all ask: “Can I get an injunction against [insert name of competitor]?”

So, due to popular demand, let’s review a few “injunction law” basics. If you still have questions when we’re done, get in touch.

Real Talk: Injunctions Are Tough To Get

Before you start the injunction process, it’s important to understand one major thing: injunctions are tough to get. Why? Simply Stated: Because free speech and fair competition are two philosophical cornerstones of the U.S. marketplace. Courts are exceptionally cautious about dolling out injunctions that could impede another party’s First Amendment rights or free market ambitions.

What You Must Prove To Get An Injunction

injunction lawyer
Injunctions are as difficult to get as VIP tickets to a high-profile premier.

You may be thinking: “What must I prove to successfully motion for an injunction?”

Like most legal questions, the answer isn’t simple – because litigation strategies are largely dependent on the details. That said, we’ve outlined some “ballpark” parameters regarding the acquisition of either a temporary or permanent injunction related to unfair competition, defamation or disruptive marketing that crosses the legal line.

#1: Ongoing Damage

To get an injunction to remove content from the Internet, the requesting party must convince a judge that letting the content stay will cause ongoing damage, at the hands of another party, who is acting contrary to laws or regulations.

injunction law attorney
To win an injunction, the petitioning party must demonstrate a likelihood of lawsuit success.

#2: Probability of Success

As stated above, judges don’t hand out orders willy-nilly. Instead, to get an injunction, judges must be convinced that, based on statutes and case law, you will most likely win the lawsuit associated with the request.

#3: Keeping the Information Published Will Cause Great Harm “In the Absence of Preliminary Relief”

If a published statement is likely to cause long term harm if not quickly removed, the statement may be a candidate for an injunction action (if the other tests are also met). To win this point, plaintiffs must demonstrate how the statement will cause actionable harm and why temporal concerns are likely to exacerbate said harm.

#4: The Public’s Interest Is Best Served by Granting an Injunction

Philosophically speaking, laws are meant to protect citizens’ interests. So, for a court or judge to grant an injunction, the potentially impending harm must be detrimental to the public’s best interest in some capacity.

Questions? Speak With An Unfair Competition Lawyer About Your Chances Of Securing An Injunction

Do you have more questions about how to get an injunction? If yes, contact the online reputation and removal lawyers at Kelly Warner. We’ll review the details of your situation and provide potential solutions.

Contact us today to begin the conversation.

Arizona Crowdfunding Law and Lawyer

Arizona crowdfunding lawyer
A change in AZ crowdfunding laws may be in the works.

July 2015 Update: It’s the law. Arizona legislators approved the measure at the beginning of the month.

***

Arizona crowdfunding may become easier if state legislators push through a new Internet law.

Currently, AZ crowdfunding regulations are strict. Because of state finance regulations, Arizona-based project creators can’t offer investors a piece of the profit pie on sites like Kickstarter.com and GoFundMe.com. Instead, Grand Canyon State entrepreneurs can only accept pure donations or offer discounts or rewards to entice “investors.”

AZ Legislators Want to Eliminate Crowdfunding Restrictions

But Arizona legislators hope to weaken the crowdfunding restriction wall by loosening the regulation reigns.

Senate Bill 1450 and its House counterpart HB 2591 would allow small businesses in Arizona to sell securities in exchange for funding. Currently, in Arizona, it’s illegal to do so without first getting the blessing of the Securities and Exchange Commission.

The Catch: Only Arizonans Can Participate in Arizona Crowdfunding

But the bill has parameters. Perhaps most notably, it only applies to Arizona residents. In other words, project creators can only offer securities to other Arizonans. To wit, a Silicon Valley VC wouldn’t be able to “buy” securities, in an Arizona, online crowd-sourced initiative.

Why the border throttle?

Lawmakers are promoting the bill as one that will jump start local investment. The operative word being “local.” In the words of Arizona Sen. David Farnsworth:

“This gives people who would ordinarily not be investing the opportunity to invest in something they believe in; something that’s close to home.”

Despite the restrictions, if the Arizona crowdfunding bill passed, it could be a great tool for Arizona startups previously rejected for bank loans.

Speak with a Crowdfunding Lawyer

Currently, 15 states have crowdfunding laws. Kelly / Warner is an Internet law firm that works with businesses and entrepreneurs in all 50 states, Canada, Europe and Australia. To speak with a lawyer about your Arizona crowdfunding legal questions, contact us.

FTC Favors Companies With Data Breach Contingency Plans

data breach contingency plan
Having a data breach contingency plan may mitigate penalties in the event of an incident.

A couple of months ago, Mark Eichorn posted a quietly significant post on the Federal Trade Commission’s blog. In it, Eichorn gives an overview of how the FTC approaches breach and data security investigations.

In the post, Eichorn advises:

“We’ll also consider the steps the company took to help affected consumers, and whether it cooperated with criminal and other law enforcement agencies in their efforts to apprehend the people responsible for the intrusion. In our eyes, a company that has reported a breach to the appropriate law enforcers and cooperated with them has taken an important step to reduce the harm from the breach. Therefore, in the course of conducting an investigation, it’s likely we’d view that company more favorably than a company that hasn’t cooperated.”

In other words, when deciding on punitive measures in data security cases, the Federal Trade Commission is often more lenient with businesses that report breaches to the proper authorities promptly. Or, conversely, if you try to hide a data breach from authorities, and the FTC discovers your deception, the commissioners may – and are legally allowed to – dole out a larger fine.

Three Data Privacy Best Practices For SMBs

  • Have a “privacy officer” on speed dial. Privacy officers are usually attorneys; they’re the people businesses can call in the wake of a data breach to determine their legal responsibilities based on the nature of the data attack or hack. Your privacy officer, depending on the information you provide, will let you know what you need to do to satisfy local, state, federal and international data breach regulations. On occasion, contingent on the circumstances, you may not have to report the incident.
  • Don’t ignore security issues. Digital hacking is a serious reality. Laboring under the assumption that “it will never happen to you” or “only the big guys get hit” is erroneous. Implement certain data security measures at your office. Also, establish data security rules amongst your employees – the most fundamental being that they’re forbidden from accessing files remotely without authorization and instruction.
  • Have data security, maintenance and breach procedures in place. Moreover, companies should make a habit of corporate-wide password changes on regular intervals. Additionally, like a fire drill, businesses should establish a data breach drill. Not only will it be helpful in the event of an attack, but being able to prove to officials that you did take precautions may mitigate eventual punishments handed down by the FTC or other government agencies.
data breach law
Kelly Warner Law can create a comprehensive data breach contingency plan for your business.

Consult A Data Breach Lawyer

Lawyers at Internet law firm Kelly Warner act as the privacy officers for several startups and businesses. We’d be happy to help you establish a data security and / or data breach program or procedure that satisfies all state, federal and international regulations. If you’re not yet ready for a consultation, you may want to read through these blog posts [will be linked to online privacy blog]. They will give a better idea of the types of online privacy and data security laws that businesses must follow. When you’re ready to move forward with an online privacy and data security plan, contact Kelly Warner’s online privacy lawyers.