Risk Management and Legal Concepts for Online Businesses

Business owners don’t need to be attorneys in order to achieve success, but a few basic legal ideas must be understood before anyone can begin a business. (That goes for old-school, brick-and-mortar companies as well!) The related concept of risk management also enters into the picture; owners need to understand how to minimize their chances of losing money, being sued, being scammed, and simply being taken advantage of. Knowing about the most common legal issues and risk management challenges that face business owners is “required reading” for anyone who wants to delve into the field of Internet profit making.

Understanding Legal and Risk-management Basics

Without getting into a morass of legal detail, new Internet business owners should be sure to make sure their business name is not already owned by someone else. The same goes for their logo. Owners also need to check and see whether they can protect their logo and business name with trademark registration. Consulting an attorney is extremely wise, but even before that, it helps to do an online trademark search and a business name search.

For owners who have someone else create a website for them, it is essential that the terms of that contract state clearly that the business owner will retain full copyright control over the website. This is usually not a problem, but it pays to make sure.

Diligent entrepreneurs will display “terms of service” and “privacy policy.” The first tells visitors about the conditions under which they can access the site, while the latter describes in detail how the owner will handle customer data. These two items are pretty much minimal requirements for any business website, and demonstrate to the public that the owner is serious and trustworthy.

Besides those two crucial legal points, Internet entrepreneurs should look at a few other areas of potential risk. For example, any business owner should be careful about passwords and change them regularly. This helps protect the integrity of website data, customer information, and essential business statistics.

Careful owners will also regularly back up their websites and their computers to prevent the loss of vital information.

It’s always a good idea to comply with state and federal laws in the area of email retention. In addition, some owners run into trouble by inadvertently using unethical SEO techniques. Make sure that all SEO tactics are “white hat” and well inside the line of legality and ethics.

Two other areas where new business owners often run into trouble involve false advertising and data retention. Companies, even small ones with a single owner and no employees, are not allowed to make false claims about their products and services. Data integrity refers to following the FTC rules about personally identifiable information of a company’s clients. The stated privacy policy must be closely followed in order to avoid trouble in this area.

The above “areas of concern” are not an all-inclusive listing of the potential legal risks that new Internet entrepreneurs face. Consultation with an attorney is helpful for those who wish to identify unusual risks that apply specifically to one’s new business. In any case, owners need to be fully aware that running a business is an activity that calls for full compliance with all applicable laws and regulations.