Speed Bumps On The Information Super Highway

In many ways, the Internet is a consumer's paradise. Can't find that certain computer gadget in town? Pop over to your favorite on-line store and away you go.

The 'Net is equally attractive to vendors. For a relatively small fee you can reach customers around the world, rather than just around town. Before taking the plunge be sure you've considered all the rules and regulations. Let's examine just a few.

The law regards retailing on the 'Net as direct sales, and subject to existing direct sales regulations. For example:

  • The Federal Trade Commission's Mail and Telephone Order Merchandise Rule sets procedures that must be followed regarding shipping dates and order fulfillment. If items cannot be shipped on time, the customer must be advised. If the revised dated cannot be met, the customer must expressly consent to any additional delay or the vendor must cancel the order.
  • California has passed a statute governing sales to buyers in that state. Among other obligations, this law requires on-line vendors to disclose refund and return policies, the legal name and address of the seller and how to contact the seller by e-mail.
Requirements such as these must be taken into consideration when developing your e-marketing plan and building your Web site.

Once you're on the 'Net, you can promote your site with e-mail notices. With one mouse-click you can send the message to customers and prospects around the world. Instantly. With no postage or printing charges. In Internet slang, unsolicited mass-mailings are called "spam": "spamming" is considered very bad manners. In addition, several states have imposed legal restrictions on "spamming" and the federal government is considering the issue. Virginia, for example, has prohibited spams sent via an independent service provider (e.g "We'll send your message to this e-mail list we've compiled). The prohibition does not apply to mass e-mailings a vendor sends from the vendor's own computer.

In response to these restrictions, on-line vendors are moving to "opt-in" e-mail systems. In these, the customer is invited to sign up for the mailing list: "Enter your e-mail address here if you'd like to receive our sales flyers electronically" To be extra safe, some vendors have instituted "double opt-in" systems, in which the customer signs up for the mailing list and the vendor's e-mail program automatically sends a response requesting confirmation. The purpose, of course, is to make sure the customer is really the party who sent in the subscription request.

Certain new on-line service providers offer opt-in e-mail marketing services designed to compliment the standard "subscribe here" Web site feature. These vendors pay close attention to e-mail regulation and can host and administer your e-mail lists. This latter feature is particularly valuable if you have large lists to deal with.

"Anti-spamming" regulations are not the only rules an "e-marketer" must be concerned with. The marketing materials must comply with state and federal advertising regulations. Copy must not be false, deceptive or misleading. If you make objective claims ("Our computer printers are faster than any other printers on the market"), you must be able to substantiate those claims. It would also be prudent to comply with the Federal Trade Commission's Telemarketing Sales Rule. That Rule requires disclosure, before any sale, of cost and quantity, limitations or restrictions and any no-refund policy that might exist.

An increasingly popular technique for attracting Web site visitors is the on-line sweepstakes: "Enter your e-mail address here to become eligible for our next prize drawing." These promotions present a variety of legal issues.

  • Are all the entrants automatically added to your mailing lists? Does your site disclose that? If not, your follow-up emails might be regarded as spam.
  • Does the promotion comply with state gaming laws? This question is particularly difficult, because the 'Net is everywhere at once, and the different states have vastly different gaming laws. On-line merchants have tried to satisfy state requirements by permitting free participation. If no purchase is required, the argument goes, nothing is "wagered" and no gambling or gaming is taking place. Of course, this is only an argument, not a proven or accepted legal defense. For that reason, some on-line merchants exclude people residing in states with stringent sweepstakes rules, such as New York, Illinois and Texas.
  • Needless to say, the contest must be fair, the drawing must be truly random and the promised prize must actually be awarded. (This requirement has stumped at least one on-line company, when it found its winner was a resident of mainland China!)
The Internet has changed, and will continue to change, the way we do business. It is not enough, however, simply to keep pace with new techniques and new technology. It is equally important to stay abreast of new legal developments to avoid the costs, distractions and bad publicity that might result from a lawsuit or a compliance action.