Is Your Business Ready for E-Commerce?
For many, the Internet has created new economic avenues to communicate with existing and prospective customers. You may use the Internet for advertising and selling; contracting; providing services; and payment processing.
Whichever way you use your company Web site, there are legal issues that impact these business activities, such as privacy of customer information and accepting electronic signatures. There are also some basic guidelines security dealers must follow for creating and maintaining a Web site.
Protect Your Site’s Domain Name, Content
When it comes to Web sites, first and foremost, secure and protect your domain name. Register your domain name and don’t let the registration lapse.
Also, carefully consider the development, operation and maintenance of your Web site. Are you going to do it in-house or use an outside developer to: (a) initially develop your site, and/or (b) maintain your site? Who is the domain provider you are using and what are the limitations, restrictions and, most importantly, information-ownership rights?
If you are going to use an outside provider, it is very important you and your legal advisor closely scrutinize the contract, particularly with the portion regarding who owns which aspects of the site. The developer will want to retain ownership of the development tools that operate the site, and the third-party software that runs the site will be provided to you under a license because it is not usually sold.
However, be sure that you own the unique content features of the site and that you can transfer them to another site and have them modified by another developer or your in-house staff. Be sure you understand what licensing issues exist and what the costs would be if you decide to change to another operator.
If you hire or maintain an internal staff to develop and manage your Web site, you should have an employment agreement with the developers. The agreement should clearly state that you own the development technology and the content. Also, copyright your content and put a copyright notice on your Web site.
Online Privacy Agreements Help Reassure Customers
The issue of privacy and the possibility of stringent rules guarding privacy are becoming more prevalent every day. The Federal Trade Commission (FTC) has taken the position that, where firms make claims about the security of its customers’ personal information, a section of the FTC Act requires that firms must validate such claims by taking adequate steps to prevent breaches that are reasonably foreseeable.
In other words, you will be held to the same standards under the age-old legal doctrines of common negligence. Federal legislation regarding privacy is expected. There have been several bills pending in the federal legislature that deal with online privacy.
In order to enhance online security, customers should be given different passwords when accessing your Web site and when operating their alarm system. It is important to be aware of laws or regulations regarding passwords.
If you are using a Web site to conduct a part of your business with your customers, post a usage agreement that explains in detail how the site is to be used. This is also a good opportunity to reinforce the contractual relationship with your customers.
Just like your sales and services agreement, a usage agreement must be tailored to your specific business needs. Generally, it will include, among other things, statements regarding limitations on the site’s use, ownership of the site’s content, a disclaimer of warranties, and another statement of your limitation of liability to the security and termination of the agreement.
Internet Policies on Advertising Are Evolving
The Internet enables businesses to advertise to both potential and existing customers. It is important to periodically review your Web site information and how you use the Internet to ensure that you comply with applicable laws. The law that applies to the Internet is not limited to laws specifically related to it.
The FTC has asserted that sellers on the Internet are subject to the same truth-in-advertising requirements as traditional brick-and-mortar sellers. So E-tailers must pay close attention to how they present information to Internet consumers to avoid engaging in unfair and deceptive trade practices.
For example, you must comply with FTC rules regarding advertising “free” products and services. You cannot advertise a “free” alarm system – if a 36-month monitoring contract is required – without including the appropriate disclosures.
The use of links for disclosures should be very obvious since the FTC scrutinizes Web ads. Your Internet ads should be as clear, honest and easy to understand as your print media. Compliance with state laws regarding fair business and marketing practices must be met.
Selling products and services on the Internet will become a very common practice for alarm dealers. Alarm systems will still be sold primarily face to face at a customer’s premises, but the industry will see a growing market for standalone/self-installed systems, for which the Internet is an attractive selling medium.
Additionally, more traditional security alarm dealers will sell add-ons, equipment changes and service additions, or modifications, over the Internet to avoid the necessity of sending a salesperson to the customer’s business or home.
Set Clear Guidelines With Using Electronic Signatures
So, should you try to enter into binding agreements for security services on the Internet? Or, you may be asking, “How can I actually do business on the Internet and accept orders for services?”
The U. S. Congress and President Clinton signed the Electronic Signatures in Global and National Commerce Act, which authorizes “electronic signatures” on contracts and makes them as enforceable as a written signature on a paper contract. Similar acts (based on the Uniform Electronic Transactions Act) have been passed in 40 states.
An electronic signature is an electronic sound, symbol or process attached to or logically associated with a record. It is executed or adopted by a person with the intent to sign a record. It is very important to review the law in your state to determine which requirements are necessary for electronic signatures.
A signature must indicate who signed the document, and should be difficult for another person to produce without authentication. It also must identify what has been signed and make it difficult to falsify either the contents of the document or the signature.
Using Customers’ E-mail Is Subject to Limitations
Using E-mail can be a very useful and efficient tool to communicate with customers and share information. A customer’s E-mail address should be part of the customer information you collect.
You can use commercial E-mail to contact existing customers and potential customers, but be careful. There are many state laws regarding unsolicited E-mail (“spam”), and more will follow.
A majority of states have passed laws that restrict the use of commercial E-mail. While these laws vary, they have four common threads:1. Commercial E-mail must have opt-out instructions and contact information, and must be honored.
2. The E-mail subject line must contain a label “ADV” or something similar so the consumer knows before opening the E-mail that it is an advertisement.
3. The E-mail can’t have falsified routing information. It must have the true address of the sender.
4. Because of interstate c
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