The biggest legal concern facing Internet businesses, marketers and affiliates is violating the FTC Act. Violate the FTC Act, even unwittingly, and you may be forced to pay huge fines, get shut down, or even have your business and/or personal assets frozen! Many website operators violate the FTC Act with their everyday business practices without even knowing it! Any business practice, claim or activity that is materially misleading and deceptive can land commercial website owners in hot water!
The FTC has enormous and broad powers to go after your business and can issue a complaint when it has reason to believe that a violation of the law has occurred. No evidence is required that actual deception occurred, or that reliance on any deception by any of your visitors or customers has occurred. All that matters is whether a claim or business practice has the capacity to deceive. In other words, they pretty much have a blank check from Congress to make life miserable for website operators that run afoul of the FTC Act.
To make matters worse, the FTC revised its guidelines in 2009 relating to website advertisements and endorsements. Website owners and online entrepreneurs now face an entirely different world when it comes to online regulation!
For example:
- You get sued by one of your customers who lives across the country and your business ends up getting dragged into court in a distant state. Your website customer agreement didn't contain a clause establishing exclusive venue for any disputes. Now your business is forced to defend a lawsuit a thousand miles away!
- A website visitor tries a product you promote on your website that is supposed to help he or she earn "huge" profits. They make no money and now they are angry and looking to sue you. Unfortunately, your website does not contain proper earnings disclaimers qualifying your earnings claims, making them deceptive under the FTC Act and most state laws.
- You provide product reviews on your website but don't bother to tell your website visitors you get paid to review those products by the different companies that sell them. Unfortunately, you do not realize your website is required to now disclose any 'material connections' as a sponsored product endorser. Due to a number of complaints, your website comes into the cross-hairs of the FTC for not disclosing this information. Better buckle up and possibly get out your check book!
