Why An Affiliate Deleted 13,164 Tweets Today

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

affiliate disclosure and tweet deletionI just watched a large Twitter account delete over 13,164 tweets because the account holder didn’t use an affiliate disclosure when promoting others’ products and services in exchange for commissions. The tweet deletes were a c.y.a. move designed to limit legal liability exposure.

That’s a shame because the tweets contained really good content, i.e. he gave out a lot of valuable content in the process of affiliate marketing.

And the sad thing is, he could have fixed the issue for any tweets he wanted to save. It would have taken just one call to an experienced Internet business lawyer to learn how to do it.

Affiliate Disclosure And Material Connections

Since December 1, 2009, Federal Trade Commission (FTC) guidelines have been clear that material connections — including affiliate status — must be disclosed so that the prospective purchaser has the key facts necessary (including your potential bias) in order to make an informed decision whether or not to purchase a recommended product or service.

This covers all of your marketing online and offline to U.S. consumers.

Some online marketers mistakenly believe they only have to comply when promoting on their websites by using the right website legal documents.

That’s not true. Disclosure requirements cover emails, social media (e.g. Twitter, Facebook), etc.

Marketing To The U.S. From Other Countries

What’s interesting is a fellow marketer on Twitter responded to the guy deleting tweets by saying the FTC’s rules and regulations didn’t apply to the marketer because he was based in another country.

That’s another mistaken belief.

If you’re marketing to U.S. consumers from anywhere in the world, the FTC has the ability to go after you for false or deceptive marketing practices.

Does the federal government go after foreigners for bad marketing practices? Absolutely. In fact there have been spammers sent to federal prison for years for violating U.S. law even though they never stepped foot in the United States prior to being arrested in their home countries and extradited to the U.S. to stand trial.

Material Connections Are More Than Just Affiliate Status

And remember, it’s more than affiliate status that needs to be disclosed. It’s all material connections that a prospect should know about.

For example, if you’ve reached an agreement with another marketer to promote to each other’s Twitter followers, Facebook friends, or email lists, that material connection should be disclosed.

Does Your Website Privacy Policy Protect You In Other States And Countries?

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

website privacy policyIn the past, a U.S. business typically needed to be concerned about the laws of the state(s) where it did business (e.g. where the company was set up) and federal law. That’s not the case today if your business is online – with or without a website privacy policy.

For example, California and the European Union may attempt to apply their laws and regulations to your business…even if your company isn’t based in California or Europe. Both have strict privacy laws and regulations that may affect your website’s legal protection.

In fact, the EU adopted an 80+ page data protection regulation that went into effect in 2018. And California has enacted a new law that’s similarly complicated…and it goes into effect in 2020.

In other words, if your site has a website privacy policy that’s a couple years old, chances are you haven’t even addressed these potential threats to your business.

Now, you could ignore these risks. And maybe a government agency won’t come after you. And you won’t get sued by someone claiming you’ve violated their new legal rights.

Of course, the prudent thing to do is have a skilled Internet business attorney review your website for compliance issues and update your site’s privacy policy, terms of use, and other legal documents. As Benjamin Franklin said, an ounce of prevention is worth a pound of cure.

7 Keys To Buying An Online Business

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couple buying an online businessAre you interested in buying an online business? Before making the final decision to purchase an Internet venture, knowing as much as possible about the company to be acquired can help set you up for success after the papers are signed.

Here are seven important factors to consider as part of your pre-acquisition due diligence…

1. Internet Businesses Are Not Just About The Website

Buying an online business means looking deeply into the metrics and data provided by the seller to tell you more about how the company operates and its current sources of revenue.

As the prospective purchaser, the seller must be prepared to ask your difficult questions regarding sources of site traffic, revenues, expenses, vendor relationships, labor relations (employees and independent contractors), etc.

2. The Importance Of Non-Competition Agreements

Although the seller of a business often wants to move on to retirement or an unrelated venture, don’t assume this is the case.

Instead, you’ll want to use non-competition agreements to ensure the seller(s) and key employees don’t walk away and use their insider knowledge to directly or indirectly compete against the company you’re buying.

3. Verify Guarantees And Potential Liabilities

Products and services offered in the past by the seller should be carefully reviewed when thinking about buying an online business. As part of this due diligence, check out old versions of the company’s website(s) from the owner (e.g. Wayback Machine).

Why is this important? Because the seller may have made commitments that you could be on the hook for if you buy the company.

For example, the seller might have offered lifetime guarantees on a product or service. Customer claims could come back to haunt you as the new owner. There are ways that an experienced Internet business attorney can eliminate or limit your potential liability exposure for such hidden liabilities.

4. Beware Of Access Issues

Although you’ll want to make certain every password is changed when you’re buying an online business, there’s more than that involved for internal security and website legal protection.

For example, you’ll want to limit internal access to essential personnel. And if there’s been custom coding, you’ll want to make sure that the developers didn’t leave any hidden back doors to access the company’s site(s) post-purchase.

5. Check Out Merchant Bank Requirements

If you already have a business (online or offline), you may already have a merchant bank that processes credit cards. You should see what additional requirements (if any) need to be met to use the same processor for the acquired venture. However, if you’re planning to use the same merchant bank as the seller, you should see what you’ll need to do to make that happen. Will the bank require personal guarantees? What about transaction fees? These costs can be important, particularly when profit margins on products/services are small.

6. Decide If You Need A Business Valuation Expert

For many acquisitions of Internet ventures, a business valuation expert isn’t retained. There are common methods of valuing such a company without paying for an expert to do it. You can discuss these with your Internet attorney and/or CPA. And, let’s face it, the market value at time of purchase is what a buyer is willing to pay.

However, it may make sense in some instances to hire a business valuation expert, particularly if you’re paying seven or eight figures for the company. The data supplied by the expert can be used for negotiating a better deal.

7. Check Out The Seller’s Email Marketing

If email marketing is integral to the online business, you will want to know how and when the seller acquired the names and email addresses on the company’s lists. This will help you avoid legal liability for unsolicited commercial email (spam) and determine monetary value of such lists based on a variety of factors (e.g. prospect v. customer, freshness, open rates, etc.).

In addition, you’ll need to determine the portability of the lists to you as the purchaser. For example, in some asset purchases, a third party autoresponder service will not transfer the lists to a new owner. On the other hand, if the selling entity’s equity is acquired (instead of the business assets), then the autoresponder service will likely let you continue to market to the lists because the entity purchased still owns the lists.

Do You Need Legal Help Buying An Online Business?

If you are serious about purchasing an Internet venture, it’s probably time to speak with an experienced online business attorney. You can schedule a phone consultation with Internet Lawyer Mike Young using our online booking system or by calling 214-546-4247.

6 Secrets To Buying An Internet Business

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

buying an internet businessAre you considering buying an Internet business?

You’re not alone! According to Nasdaq, it’s estimated that 95% of purchases will be through eCommerce by 2040. That means individual investors are seriously looking at internet businesses to jump into the eCommerce boom.

Like all investments, purchasing a website carries certain risks. Not all deals are as good as they may seem. It’s unwise to jump into the eCommerce market without performing due diligence. The following contains detailed steps you should take to maximize your investment and protect yourself from lawsuits.

1. It’s practical to use a broker to meet sellers, but don’t use their forms!

Using an internet business broker is a great way to find motivated sellers and potential opportunities when buying an Internet business. Some of these brokers will even offer in-house legal forms to help you during the purchase of a website.

Buyer beware! Because most of these business contracts are not written by lawyers, and even worse, they are not written with your best interests in mind. There is no way to ensure you are adequately protected when you use broker-provided forms — unless you have an experienced business and technology attorney review the contracts for you.

2. Don’t makes the same mistakes as Microsoft and Alibaba investors

Even tech giants make mistakes. When Microsoft purchased LinkedIn, they purchased an online business with a disastrous financial model. Ultimately, they paid 7x Linkedin’s annual revenues (not profits!) to close the deal. While they may have had a legitimate interest in Linkedin’s data and platform, their valuation did not make good business sense and they took a huge loss on the purchase. Microsoft may have had the funds to bail out an unprofitable venture, but as a solopreneur you probably won’t have as much financial wiggle-room.

Another huge eCommerce investment blunder was the Alibaba.com initial public offering. While the company’s founder, the Chinese government, and Wall Street underwriters benefited from the IPO, unsuspecting investors set themselves up for failure.

Because the Chinese government restricts foreign ownership in technology companies, investors were only able to purchase equity in an offshore shell corporation that exists only on paper. The problem with this is that Alibaba is under no obligation to actually disclose or transfer profits to the shell corporation. Even worse, the shareholder contracts are only enforceable as long as the Chinese government agrees that they are. Basically, shareholders have no way of ensuring that they ever see any profits; they spent $93/share on a virtually worthless piece of paper.

As discussed below, it’s on you as a potential buyer to perform your due diligence before signing any contracts.

3. Perform a legal diagnostic on the website before purchasing

An experienced Internet attorney can help you perform a legal diagnostic of any website you’re considering purchasing to identify legal risks that may exist on a seller’s website. You don’t want to take ownership of a website only to find out the previous owner infringed on another’s intellectual property. You are looking for an investment when buying an online business, not a lawsuit!

4. Prepare a non-binding letter of intent before entering any contracts

When you first start negotiations with a website seller, you will want to protect yourself legally before you ever enter a legally enforceable contract. With a well-written non-binding letter of intent, you can maintain your ability to walk away if you discover any information that makes the potential deal unattractive.

5. Ensure your legal documents address dispute resolution

Sometimes deals go sour. The best way to protect yourself is to outline what you will do if a dispute occurs long before the dispute arises. Internet Business Attorney Mike Young suggests including alternative dispute provisions like mediation and arbitration that will help you work out the dispute without the need to go to court (saving you time and money). However, you will want to create an exception for intellectual property infringement and non-compete disputes so you can head straight to court if either of these issues arise.

6. Know what you’re actually purchasing

Last, but not least, make sure you know what you’re purchasing. Make sure you will have ownership over all intellectual property and ensure the previous owner legally owned all images and content. The last thing you want to find out is that the website you’ve purchased has stolen content or that the seller retains ownership over the content they created.

Do You Need Help Buying An Internet Business?

If you’d like legal help buying an Internet business, schedule a phone consultation with Attorney Mike Young today.

Website Design Contract Scope Of Work

By | Website Lawyer, Website Legal Documents | No Comments

website design contractAs discussed in “3 Things You Should Know About Website Design Agreements,” a website design contract’s scope of work is essential to the success of the project — both for the web designer and the client.

The scope of work should include, at a minimum, the following information…

  1. What is being done
  2. When it will occur (e.g. milestones with deadlines)
  3. Who is doing the work (designer, subcontractor, etc.)
  4. When payments are made (e.g. triggered by milestones achieved)
  5. What is excluded from the design project (e.g. article writing or other content creation)

Related Article – 10 Keys To A Great Website Design Agreement

The more detailed the scope of work, the less likely there is to be a disagreement between designer and client as to performance of the website design contract. If you need help with website legal protection, set up a phone consultation with Attorney Mike Young today.