There is no denying the impact of the Internet on commerce. Many businesses utilize websites, social media, and other web-based platforms to promote their products and services. In fact, an entire industry has emerged comprised of what are now commonly known as “e-commerce” based business – entities that rely solely on the Internet as their means of engaging in commerce. Similarly, consumers are using the Internet as a primary source of information to make decisions on what they will purchase or from whom they will retain services – whether it is a simple “Google” search or an analysis of consumer reviews. Besides consumers, both employers and employees are increasingly making it a point to search the Internet before making a decision to hire an individual or to apply for a job. In this regard, websites provide an opportunity for businesses to connect to their customers/clients and future employees by instantaneously sending a message about their brand to the world.
Soliciting such a large audience requires businesses to be thoughtful of the obligations and responsibilities that go along with having a presence on the Internet. While creating a website for advertising businesses has become increasingly popular, entrepreneurs should be mindful of the potential for exposure to legal liability. Various federal and state laws govern businesses’ ability to advertise on the web. These restrictions depend in large part on the company’s location, where their customers live, and the industry in which they operate.Special consideration should be taken by businesses that actually engage in e-commerce (selling goods or services over the Internet), since their activities may involve more legal issues than a website that merely uses the web for advertising purposes. However, even websites that are only created for advertising purposes should be mindful of best business practices to protect themselves from liability.
Since these considerations are more general, this article will explore the general business and legal issues for non-e-commerce websites first, followed by a separate analysis specific to e-commerce websites, and finally some general considerations for both.Finally, each business is unique and the information provided in this article should not be relied on as legal advice, so an individualized and customized legal review of your website and business is recommended.
Security and Privacy Policies
Businesses should also establish security measures to prevent against hacking and the theft of sensitive consumer information.In the event of a security breach, New York State law requires that businesses follow certain procedures to notify consumers whose private information may have been accessed by unauthorized parties.  Including a notice to consumers about what steps will be taken by the company in the event of a security breach is a good idea because it forces companies to flesh out what those procedures are and it assures consumers that the company takes security seriously. Consumers should also be advised that the website host makes no representations as to the security or validity of information that may be obtained through links that lead to other websites.
If there is a blog related to the website that allows users to post comments, or any other forum for visitors to leave comments or reviews, there should be a clear policy of how contributions by visitors will be reviewed and approved.This helps to protect both the website host and the consumer from Internet “trolls” who post comments solely to harass and annoy others or comments that are misleading or violate the law.Additionally, posting clear guidelines on what sort of posts will be approved allows consumers to contribute valuable feedback to the benefit of the business and their client base.
Businesses seeking to protect their intellectual property rights should include notices that unequivocally claim ownership over all the language and material on the site, including the brand name. Providing these notices in a clear and understandable manner helps avoid customer confusion as to what rights and obligations are triggered when accessing a business’ website.
- Content development: Be sure to execute written agreements with those that are contracted to provide or develop material for the website to ensure that the content remains the property of the website host.
- Licensing: If stock photos are used, be aware of what type of license applies to that copyrighted material.Just as you do not want others infringing on your intellectual property, you should do everything in your power to avoid infringing on the property rights of another.
- Copyrights: These protect works of authorship.
- Putting a copyright “©” notice at the bottom of your home page may deter others from using the language that is on your site, but actually filing for copyright protection of that material is the only way to secure your rights under Federal law in the event that someone copies your material and you decide to sue them for copyright infringement.Keep in mind, however, that copyrighting the material on your website does nothing to protect the brand name of your business.
Prior to acquiring a trademark for your business, you should perform a trademark search to be sure you are not infringing on an existing trademark. Using “™” next to your company name gives you minimal trademark protection and puts others on notice that you have already claimed the brand for use in commerce.
For the highest protection available, your brand name should be registered with the USPTO, but keep in mind there are various additional considerations to take into account with that process (such as the application being rejected), which are outside the scope of this article.
For the purposes of this article, e-commerce businesses are generally entities that sell products or services exclusively through their websites, or who in large measure rely on the Internet to execute major portions of their operations.Many e-commerce based businesses are structured so that most of the interaction with the consumer takes place online.Typically, customers select the products or services they desire and complete their purchase all on a company’s website, which often includes selecting a method of delivery of the product. For issues or questions, customers can sometimes even communicate live electronically with customer service representatives through a chat system on the company’s site. Naturally, e-commerce businesses are subject to a higher potential of liability through their websites than a business utilizing only a Banner Site.At a minimum, the amount of customer data that is collected by such a business creates legal obligations for these businesses regarding the manner in which their customer data is handled and protected.
Terms of Service
Sales and Return Policy
Customers placing an order through a website should be able to easily access the company’s Sales and Return Policy prior to completing a purchase.The terms of the policy should be clear and unambiguous and allow for customers to print and save them.Employing these safeguards will help avert customer confusion and the need to deal with complaints down the road.
In New York, a company may not advertise or accept orders over the Internet for merchandise that cannot reasonably be shipped within thirty days, unless they conspicuously disclose in the online advertisement the potential for delay. 
In addition to Federal tax, businesses venturing into e-commerce must be sure to comply with all local and State sales tax laws for the localities in which they engage in business or customers reside.
All websites are a form of advertising, generally speaking, and all business advertising in New York – on the Internet or another medium – is governed by General Business Law §§349 & 350.These statutes in sum and substance prohibit deceptive and fraudulent advertising.
These statutes allow any individual deceived by advertising to sue businesses for deceptive advertising or to file a complaint directly with the Attorney General, who may choose to investigate and prosecute violators of the GBL.  These statutes, and others like them, bar many types of deceptive/fraudulent practices that businesses should be aware of.Some examples include:
- Spamming – sending unsolicited emails in bulk.
- Spoofing – falsely soliciting business through another person’s email account is considered fraud.
- Astro-turfing – posting fake positive reviews for your own business.One company paid a $300,000.00 settlement with the NYSAG for astro-turfing. 
- Adware & Pop-ups – Adware is the software that generates pop-ups, which are unsolicited advertisements.Those advertising through adware must provide users with full identification and descriptions of any adware downloaded on to their computers, and obtain their consent before downloading and running the software.
- Burying notices – Notices to consumers that they have a right to know about cannot be buried in lengthy, fine-print web pages, such as automatic renewal charges.
- Unsupported claims – Businesses cannot make unsupported claims and assume that they will be regarded as ‘mere puffery” rather than fraud, e.g., claiming to be the number one law firm listed on Google, but only showing up in searches 50% of the time.
- Shill bidding – bidding on items you have put up for online auction in order to inflate the price.
- Games of Chance – Statements must be filed with the AG for any games of chance that are used for advertising or promoting where the value of the prize exceeds $5,000.
- Domain Names – cannot be registered if they use the name of another living person without their consent for profit.
- Advertising to Children - In the case of businesses that are actively marketing to children, their websites must comply with the federal Children’s Online Privacy Protection Act (COPPA), which imposes certain restrictions on advertising directed to children under 13 years of age.
Industry-specific legal notices and disclaimers
Depending on the industry your business is engaged in, there are specific disclaimers required by law.Below is a list of some of the professions/industries and the corresponding statutes imposing such requirements. It is important for the implicated business to be in compliance with the requirements of these statute as it relates to their website.
- -Tax Preparer
- -Consumer Credit Report
- -Free Trial Offers
- -Internet Dating Sites
- -Peer to Peer Applications
While this article attempts to provide a general analysis of the Internet, online commerce, and ensuing liability today, the fact is that technology is advancing at such a rapid pace that many of the points in this article will be become obsolete or irrelevant in short order. In fact, many of the laws that we now have on the books are already starting to come into conflict in some instances with the realities of e-commerce and are creating ambiguities with regards to the legal liability and exposure businesses face in this ever-changing environment. At the same time, the law is managing to adapt in certain areas of this new reality (albeit slowly), as highlighted in this article, and while this area continues to grow and develop, the obligation of businesses to remain compliant must also grow and develop.
This article was prepared by Yogi Patel, partner Lloyd Patel LLP with the assistance of Susan Reyes (Summer Associate), August 20, 2014, for educational purposes only. The article is intended to provide general information on a wide range of issues, including but not limited to legal issues. It is not intended to provide specific legal advice and no legal advice is given. This blog does not create an attorney-client relationship and should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
Where appropriate (depending on the content of a website), businesses should make sure that children under 18 years of age cannot access explicit material on their websites by including a notice that requires users to affirm they are over 18. For businesses actively advertising to children under 18, please refer to the advertising section below for a summary of applicable federal law.
N.Y. Gen. Bus. Law § 899-aa.
N.Y. Gen. Bus. Law § 396-m