Protecting Your Online Bottom Line

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

An award-winning small business attorney in New York City, Nina is a sought-after professional speaker and Entrepreneur Magazine online contributor. She is the go-to counsel for knowledge economy and creative companies, delivering legal services and educational resources that save them time, money, and aggravation.

Posted on April 11, 2016 in Business Essentials

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Online businesses have a great advantage for customers:  they make it so easy to purchase whatever you want, whenever you want. Here’s the downside: you’re less likely to have a “personal” relationship with an online business.  You don’t know the owners, have no clue who’s providing the service or product, and might not even know where the company exists. Also, without seeing the product, the purchaser is taking a risk that what’s ordered won’t be quite right.  (I can attest to the number of times a dress really embraced the model in the photo, but hugged me in all the wrong places!).

There’s another factor, too:  the flake factor.  Without a personal relationship—dealing face-to-face with another person to make a transaction—it’s easier for a purchaser to make up a story that she didn’t mean it/didn’t know what she was buying/didn’t agree to these terms” (choose the lame excuse of your choice). 

How can online businesses guard against the factors that erode your bottom line?  By implementing these two parts to an online business contract system.

Getting to Yes with Click-Through Agreements

Why wonder? Make it easy for your customer to say “yes.”  A big red button, saying “I agree” or an acknowledgement check box can go a long way to avoiding misunderstandings.  Increasingly, courts hold that mandatory click-through agreements provide a powerful defense against a “who, me? I didn’t mean to do that” claim by an online purchaser.

Having mandatory click-through agreements on your website helps stave off contract disputes. Adding “agree” checkboxes can close the loopholes. They provide an important advantage over an e-mail exchange because the terms you set are yours. It’s a take-it-or-leave-it proposition, which streamlines your customer intake process. Also, by going through these steps to make a purchase, the customer has to confirm her consent to your terms. Again, it’s a strong defense to an “I didn’t know I was getting into this” attempt to weasel out of the transaction. Without some form of confirmation that your customer has agreed to your terms, you risk having to fight off contract disputes in any place your customer has come from (which, given the reach of the Internet, could be the entire world).

Minimizing Erosion with Website Terms

So you got a customer to agree … but what has she agreed to?  First, you want to be sure the customer agreed to make the purchase. Then, your website terms provide additional conditions—like your return policy (no, you may not return lingerie 6 months after you’ve worn it) or choosing which state’s courts will resolve disputes (if you’re in Delaware, you don’t want to schlep to Alaska over a $1000 item; the airfare alone could eat you up).  Many small businesses don’t have website terms and conditions, and therein lies the danger.

Website terms are more than fuel for attorneys to go on intellectual joy rides. The same reasons that contracts are important for face-to-face business exchanges also apply in cyberspace. You want to be sure (1) you’re clear on your customer’s specifications, (2) you’re paid at the price that you set, and (3) you minimize any ill effects of problems that can arise. Those basic principles apply whether you’re selling speaking training services directly to Sam, or promoting your packing crates online to Pamela in Poughkeepsie. In both cases, you want to be sure your customers clearly understand.

E-commerce raises legal issues that you don’t see to the same degree in the “bricks and mortar” world.  If your website is a brochure-type site that simply promotes your own services, you may not need as robust a list as a site like Amazon.com. Consider the following:

  • Parental consent for purchases by children
  • Information Sharing and Disclosure – will the personal information be rented, shared, or sold? If so, under what circumstances?
  • Security of information
  • Limitation of liability (no responsibility for customer losses except to the extent – should you choose – of refunding the purchase price or replacing the items)
  • Choice of law and forum (where disputes will be resolved)
  • Pricing and price changes
  • Return policies
  • Shipping charges, taxes
  • Electronic communications (consent to communicate by email)

Click-through agreements and website terms are an important part of your online business contract system.  These provisions can vary depending on the products or services you offer, so make sure to develop them with an attorney to ensure they’re relevant for your business and protect your online bottom line!

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