Manage Subscriptions · Subscribe Now · F.A.Q.'s
HOME · Thursday, May 22, 2008
Accounting, Management & Legal
Your eCommerce Activities Could be Criminal
Flurry of new laws affect email, site visits, processing payments, more
The online world is an interesting place today for many reasons. Remember the old western movies when the cowboys came into town for several days of mischief? After weeks on the range, they would often decide on their own what laws to follow with predictable results leading to mayhem and murder. Lynch mobs and posses were the response by many townsfolk. Lawmen, lawyers, and judges would one day play the proper role in attempting to lasso both the cowboys and the vigilantes, but for many years a state of transition existed within a relatively lawless society. Today, the online world is in a similar state of transition. Let’s consider some analogies.
Cowboys might witness a shootout in a town and assume that assault, brandishing a firearm, and murder are all permitted. The entrepreneurs of today often make a similar assumption. I can’t tell you how many times our clients tell us that they have no criminal risk because other sites are doing the same thing they want to do. Or they point us to a site that incorrectly explains why something is legal. And, they continue, even if it is illegal, under the theory that no one is going after these sites. My response: It is one thing to assume civil risk, but you need to make a fully informed decision on all risk factors, and going to jail is not a mere inconvenience. Ask the young man who recently got a jail sentence of nine years for sending spam how he feels as he dines on the exquisite cuisine each morning at 5am!
“Wild west” renegades understood geography and legal jurisdiction. Think about it…they knew which towns to avoid by the reputation of the sheriff and his crew. The safest towns back then were the ones with the gunslinger extraordinaire as sheriff. Of course, it’s not that simple today. An online business is typically subject to the laws of every US state and you rarely have the ability to select the laws you want to follow. There are some techniques, tactics and strategies to try to manage the risk involving the location of your corporation, servers, and offices, but you cannot solve a criminal exposure problem by geographic “cherry picking”.
Lawlessness in the west was met by the passage of tough laws and stiffer penalties, with a “hanging judge” ready to dispense quick and swift justice. Steal a horse today, and you could die tomorrow. In a short period of time, lawlessness subsided and “justice” prevailed in towns across the west. We are at this stage today in the online world. It seems that every time there is a problem in cyberspace, a new law or regulation makes it a crime. At the same time, prosecutors and police are applying laws to the online world in a manner not previously contemplated. Criminal risk must now be considered in almost every endeavor.
SENDING COMMERCIAL EMAIL
Can-Spam criminalizes sending commercial email unless you follow certain precise requirements. Note that the definition of “sending” would likely apply to co-conspirators, so the conduct of affiliates acting on your behalf could put you in jail.
VISITING COMPETITION
Federal and state laws prohibit “unauthorized access” to another site. Running an automated program to get your competitor’s pricing, or even visiting a competitor’s website, can open you up to criminal exposure. Read those terms of website use very carefully!
OFFERING A BUSINESS OPPORTUNITY
Both federal and state laws require certain business opportunities to by licensed as franchises and state laws limit certain multi-level marketing websites (pyramid schemes in the eyes of the prosecutor).
PROCESSING PAYMENTS
Issuing refunds to international entities, or acting as a forwarder or clearinghouse for funds, used to be fine. Post 9/11, thanks to the Patriot Act, it may not be okay. Depending upon your practice and the records you keep, you may be violating federal money changing laws.
SELLING PRODUCTS/SERVICES
Do you sell anything? Make sure you live up to your end of the bargain. State fraud and larceny laws are being applied to what most would consider civil disputes. If there is a reason you got paid for a product, but did not ship, make sure you document it and have ample legal basis for your actions.
How far fetched are the risks? Well, all of these scenarios are real investigations, real police raids, or real prosecutions! Our commercial email client got raided by a dozen FBI agents. Our “unauthorized access” client had both of its offices raided simultaneously by the FBI. Our business opportunity client was arrested and prosecuted. Our payment processor was raided by the FBI, and our merchant is under investigation by police in two states. Almost all of these problems did not arise from intentional violations, but from ignorance of the law by our new clients.
In closing, understand that the pursuit of violations of criminal laws is increasing dramatically as cyber-crime units are added to local, state and federal law enforcement. The trend will continue. The Department of Justice has just recently issued regulations requiring all kinds of legal notices on websites carrying “adult” content and is building a special unit to prosecute violators. Whatever your personal belief is about such content, you have to really wonder whether a misspelled word on a website notice should result in a felony conviction, up to five years in prison, and the branding of a website owner as a “sex offender”. Bring on the lynch mob, the hanging judge, the posse, and the vigilantes. Let’s get this transition period behind us and move on to a more balanced perspective on criminal conduct. Until that day happens, make sure you hitch your wagon to the right horse!
The information in this article is not intended to be legal advice. Always consult your attorney when faced with legal issues.
Blinklist | Del.icio.us | Furl | Ma.gnolia | Newsvine | Spurl | Reddit | Technorati
Published on Wednesday, February 01, 2006
Comments:
Ecommerce Articles
- Browse All Articles
- Browse our complete archive of ecommerce articles.
- Accounting, Management & Legal
- Ecommerce articles related to managing a small business including ecommerce accounting, business strategy and legal considerations.
- Conversion & Usability
- Online business articles about converting web site visitors into customers and how to gauge and improve your business website's usability.
- Development & Programming
- Articles to help designers, developers and programmers create successful, search engine friendly ecommerce websites and improve existing ones.
- Hosting, Infrastructure & Software
- Articles for ecommerce businesses about ecommerce web hosting, business infrastructure, business strategy and helpful ecommerce & small business software.
- Interviews & Profiles
- Interviews with prominent ecommerce business personalities and profiles of successful online businesses.
- Inventory & Shipping
- Ecommerce articles about inventory management, ecommerce order fulfillment and product shipping considerations.
- Marketing & Revenue Growth
- Articles relating to online marketing, email marketing and using the Internet to growing your business.
- Search Engine Optimization
- Search engine optimization articles for ecommerce business owners, strategists, marketers and developers.
- Shopping Carts & Online Payments
- Articles covering ecommerce shopping cart platforms and options for choosing an online payment gateway.
- Training & Education
- Tutorials and articles providing training and education for ecommerce business owners and developers of ecommerce websites.
Search Articles
Ecommerce Community
- Ecommerce Blogs
- Read our blogs about ecommerce topics written by industry professionals.
- Community Forum
- Connect with other ecommerce professionals to trade advice and answers in our community forum.
- Podcasts
- Check out our ecommerce podcasts covering topics ranging from interviews to tutorials.
- RSS Content Feeds
- Subscribe to our RSS feeds and have fresh ecommerce content delivered to you.
Ecommerce Resources
- Free Email Newsletter
- Sign up for Ecommerce Notes, our free email newsletter for ecommerce business owners and developers.
- Ecommerce Directory
- Browse our directory of ecommerce products and services, or submit your own listing in our directory.
- Ecommerce Glossary
- Familiarize yourself with terminology or submit terms to help others with our Ecommerce Glossary.
- Events Calendar
- Find out about upcoming ecommerce events or invite other ecommerce professionals by posting your own event.
- Press Releases
- Browse ecommerce related press releases and post your own press release for distribution.
- Ecommerce Store & Back Issues
- Pick up back issues of Practical eCommerce magazine along with other merchandise from Practical Ecommerce
About Practical eCommerce
- Frequently Asked Questions
- Look at frequently asked questions regarded using our website, subscribing to our magazine and more.
- Advertising Information
- Information about advertising in Practical eCommerce magazine, on our website, or in our email newsletters.
- Editorial Sharing
- Learn about options for sharing our content with your visitors, customers or employees.
- About Us
- Learn more about Practical Ecommerce magazine and meet our staff.
- Contact Us
- Contact Practical Ecommerce at any time for more information. We'd love to hear from you.
Copyright 2007 Confluence Distribution, Inc. and Practical eCommerce.
All Rights Reserved.
There are no comments posted for this article.