Online Business Law

Setting up your business on the Internet can be a lucrative way to attract customers, expand your market and increase sales. For the most part, the steps to starting an online business are the same as starting any business. However, doing business online comes with additional legal and financial considerations, particularly in the areas of privacy, security, copyright, and taxation.

Rules and regulations for conducting e-commerce apply mainly to online retailers and other businesses that perform consumer transactions by collecting customer data. However, even if you do not sell anything online, laws covering digital rights and online advertising may still apply to you.

The Federal Trade Commission (FTC) is the primary federal agency regulating e-commerce activities, including use of commercial emails, online advertising and consumer privacy. FTC's E-Commerce Guide provides an overview of e-commerce rules and regulations.

The following topics provide further information on how to comply with laws and regulations related to e-commerce.

Protecting Your Customers' Privacy

Most businesses collect and retain sensitive personal information from their customers and employees such as names, addresses, social security numbers, credit card numbers and other account numbers. Protecting personal information not only makes good business sense, it can also help you avoid legal problems. Depending on the type of data you are collecting, and who you are collecting it from, you may be subject to federal and state privacy laws. This guide explains which privacy laws apply to your business and how to comply with them.

  • Overview of Privacy Laws

    Learn how the Federal Trade Commission enforces companies' privacy policies about how they collect, use and secure consumers' personal information.

  • Identity Theft - Business Owner's Responsibilities

    Learn how to protect your customers' personal information against identity theft, and your responsibilities when one of your customers becomes an identity theft victim.

  • Using Consumer Credit Reports

    If your businesses uses credit reports to extend credit to your customers, there are rules and regulations you must follow to ensure privacy of credit information.

  • Privacy Rules for Financial Companies

    From national banks to local mortgage lenders, any business that handles personal financial information must comply with the Gramm-Leach-Bliley (GLB) Act.

  • Children's Online Privacy

    Learn how the Children's Online Privacy Protection Act requires businesses to follow specific rules and regulations when collecting online data from children.

  • Computer and Information Security

    Find out how to not only protect your company's computer systems, but the sensitive information contained in them.

  • 10 Step Tutorial For Starting An Online Business

    A brief tutorial for starting an online business.

  • Selling Internationally/Exporting

    Offers information to retailers participating in the global economy via the Web. If you are going to ship your products overseas, you need to be familiar with these basic exporting rules and regulations.

Online Advertising and Marketing

An old cartoon in the New Yorker showed two dogs in front of a computer, and had the caption "On the Internet, Nobody Knows You're a Dog." The inherent anonymity of the Internet has fostered a number of shady advertising and marketing practices, such as unsolicited email spam. Over the past decade, federal and state governments have passed additional advertising laws that protect consumer privacy and ensure fair and truthful advertising practices online. If you plan to advertise online -- whether you're buying ads on search engines or direct marketing through email -- you'll need to understand some basic rules.

Digital Rights/Copyright

Personal data is not the only thing protected on the Internet. Digital works, including text, movies, music and art are copyrighted and protected via the Digital Millennium Copyright Act (DMCA). The DMCA offers a number of protections for information published to the Internet, as well as other forms of electronic information. Among its many provisions, the DMCA:

  • Limits Internet service providers from copyright infringement liability for simply transmitting information over the Internet. However, service providers, are expected to, upon notification, remove material from their web sites that appear to constitute copyright infringement.

  • Limits liability of nonprofit education institutions for copyright infringement by faculty members or graduate students.

  • Makes it a crime to circumvent anti-piracy measures built into most commercial software. However, reverse engineering of copyright protection devices, is permitted to conduct encryption research, assess product interoperability, and test computer security systems.

  • Provides exemptions from anti-circumvention provisions for non-profit libraries, archives, and educational institutions solely for the purpose of making a good faith determination as to whether they wish to obtain authorized access to the work.

  • Outlaws the manufacture, sale, or distribution of devices used to illegally copy software.

  • Requires that "webcasters" pay licensing fees to record companies.