5. Breaking the Law
Liability: Hundreds of laws govern the internet. The number and complexity of these “internet laws” often make it difficult to navigate the maze of regulation with any precision. Adding to the confusion is the fact that many of these “internet laws” are industry specific. As only certain types of companies are required to follow them to the letter, the laws generate much less publicity and information about compliance issues.
Failure to work with your attorney to comply with industry specific federal legislation, however, such as COPPA, Graham-Leach-Bliley, HIPAA, or international conventions such as the EU Directive, could lead to drastic penalties. Monetary penalties may include fines and injunctions associated with failure to comply with federal and/or international law. Even more of a concern are the costs associated defending your company in court against alleged violations of these laws. Compliance violation defense costs can run half of a million dollars or more.
Solution: Any company that relies on its internet presence for business should have a working relationship with a knowledgeable attorney and an internal legal regulatory compliance committee. The committee is responsible for following statutory regulations governing your company and its internet activities. The language of online regulations is available long before Congress passes the language into law. Once the language becomes the law, Congress typically implements a compliance deadline date at some time in the future. Outlining policies to obtain the regulatory language as far in the future as possible and working with your lawyer to comport with the requirements far in advance of their deadline date is critical.
Ambiguities inherent in internet related legislation makes strict compliance difficult, and often requires a certain amount of seasoned guesswork. It is, therefore, often necessary to enlist the assistance of specialized attorneys, well versed on internet related issues, to coordinate compliance efforts and respond to government agencies regarding specific laws. The main thing to remember is that identifying and comporting with industry specific internet regulations sooner, rather than later, is often enough to move the regulatory crosshairs off your company and onto a less nimble competitor.
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