Mitigating Risks in the Digital Age

Legal Considerations for Online Businesses

Whether you are an entirely online business or you have an online component to your business, you face unique challenges not faced by traditional brick-and-mortar businesses. With the ongoing prevalence of data breaches, hacking attempts, and phishing scams, you and your customers are more susceptible to cybersecurity threats. Furthermore, the varying and fast-changing laws across different states, regions, and countries can make regulatory compliance extremely complex.

 

Today, business owners must face these challenges head-on or risk their business. However, failure to respond to these challenges adequately can affect more than your sales; it can affect the long-term success of your business. Just one minor issue and you may be faced with a loss of consumer trust, lost revenue, or penalties associated with compliance issues.

 

Technology is both a sword and a shield for businesses. Companies must devote time and attention to technology-related matters that will impact their daily risk and liability. In this article, we will look at some of the common challenges and risks inherent in doing business online, and what business owners and leaders can do to mitigate them.

 

Managing Cybersecurity Threats

With more and more business operations moving online, it’s hard to find a company with no sensitive data on the cloud. If your e-commerce business collects, uses, and stores sensitive data or personally identifiable information (PII), such as credit card information, Social Security numbers, health or financial records, or even biometric data, ensuring your systems are private and secure is of paramount importance.

 

Business owners and senior leaders also need to be aware of the privacy laws in their jurisdictions, particularly those that apply to their industry. There are privacy laws at every level of government, federal and state. And, if your company operates internationally, you’ll also need to be aware of the privacy laws in the other countries where you do business.

 

For example, in the U.S., businesses are potentially subject to the Privacy Act of 1974 and the Health Insurance Portability and Accountability Act (HIPAA), among other laws. State laws may also further impact how companies store, access, and use their customers’ or patients’ sensitive data.

 

Remember, website compliance and data protection are very contentious areas, particularly because technology evolves at such a fast pace. E-commerce businesses need to prioritize how they manage, store, and display information.

 

Do You Have a Data Protection Plan?

Effectively protecting customer data can make or break a business. Without proper safeguards, businesses leave themselves vulnerable to data breaches, fraud, and cyberattacks. Every e-commerce business needs a comprehensive data protection plan that includes regular risk assessments, employee training, encryption protocols, and data backup systems.

 

Additionally, we encourage business leaders to develop a clear incident response plan in case of a breach or cyberattack. This plan should include steps to take immediately following the discovery of a breach and procedures for notifying customers and authorities as necessary. This plan can help mitigate the damage caused by a cybersecurity incident and demonstrate your commitment to protecting customer data.

 

Where to Start

The first step is to evaluate your business and how you are using and displaying data. From there, plans for internal protection, along with website agreements, need to be developed and routinely maintained. Make routine reviews part of your process.

 

When developing your data protection plan, always consider federal and state regulations. Understanding these regulations can help guide you in the legal language, documents, and agreements you need in place. By prioritizing regulatory compliance, you protect yourself and your customers.

 

Additionally, don’t be taken in by online templates and documents. Developing a data protection plan for your business is not a one-stop agreement; these plans and associated documents are highly customized and business-dependent.

 

Have You Considered Your Advertising & Marketing Strategy?

A company's digital marketing and advertising strategy is often overlooked when assessing for potential compliance issues. Like print advertisements, online marketing materials are subject to a myriad of laws and regulations that can vary significantly by region and country.

 

No matter what industry you are in, what products you are selling, or whom you are selling to, you must be aware of laws surrounding how you can and cannot market your product or service. From the language you can use to other, more elaborate marketing tactics, e-commerce businesses must remain compliant.

 

In particular, ADA violations are a very significant area of litigation at the moment. This is directly tied to advertising and marketing and should be highly scrutinized to ensure compliance. As new technologies become integrated into the online marketplace, business owners need to ensure that they fully understand the full scope of these technologies and how they may impact their own, specific compliance efforts.

 

Be Proactive About Digital Risk Mitigation

In an increasingly digital world, being proactive about mitigating digital risks is not just a best practice—it's a necessity. Those in the e-commerce space should familiarize themselves and stay abreast of all regulatory changes, especially in the coming months, as the new election cycle may result in significant changes to how we do business online.

 

Furthermore, be aware of potential threats and proactively protect your and your consumers’ sensitive data. Doing so can help you maintain trust while safeguarding against attacks, fraud, and other cybersecurity threats. When your business is on the line, implementing a robust risk management strategy is always worth it.