Promotional Liability
The Federal Trade Commission ("FTC") is the federal agency with jurisdiction to enforce laws pertaining to unfair competition and/or deceptive trade practices by websites. The scope of what might be considered an "unfair" trade practice is broad, indeed, and websites have been a favorite target of FTC enforcement actions. Information pertaining to such enforcement activity can be found on the FTC's website www.FTC.gov. Special consideration should be given to "free" products or services, along with any consumer transaction where the user is surprised by some activity or charge. Experienced advertising counsel can help identify concerns for promotional activities and your marketing plan in general. In the event that any promotional activity occurs using unsolicited bulk email, advice should be obtained regarding compliance with the CAN-SPAM Act regulating such activity.
Obscenity/ Indecency/ Free Speech Concerns
Many dating sites allow users to post risqué, or sexually explicit images in connection with their profiles, and some tend to appeal to more erotic view points. Any image depicting nudity or sexual activity that appears on an Internet dating site will implicate various legal concerns pertaining to obscenity, indecency, and the Records Keeping and Labeling Law, Title 18 U.S.C. § 2257. This is an extremely complex area of the law, and one to be evaluated only by a specialist in the area. Under current federal law, all images depicting sexual activity posted on a commercial website need to be accompanied by a disclosure identifying the custodian of age records pertaining to the model depicted in the image. Failure to comply constitutes a five year federal felony with no potential for sentence reductions by federal judge upon conviction. Any image that can be categorized as obscene, can result in a variety of charges under state and federal law; some with significant penalties, fines and forfeitures. Careful consideration should be given to any system that allows users to instantly post images of themselves (or others), particularly sexually-explicit images. Use of the Communications Decency Act, Section 230 Immunity, and the DMCA Safe Harbor should be considered in this instance, as well.
Employees, Wages, and Taxation
An online dating business is the same as any other business, in various respects. Those employed to perform services for the business must be properly categorized as employees, when appropriate, and paid wages with proper income tax withholdings performed. Careful considerations should be given to such matters as employee handbook creation, overtime, vacation and benefits policies, confidentiality and non-compete agreements and other typical employment matters. Sexual harassment concerns occasionally arise in any business focusing on intimate relationships between human beings. Therefore, a specific policy pertaining to workplace environment and sexual harassment complaints should be considered and implemented.
Website Development Issues
Another area of particular concern relates to the development of the online dating site itself. If an independent website development company is chosen to create and maintain the website, appropriate legally binding contracts should be executed dealing with issues such as who owns the copyright to the website content, how the developer will be paid, whose obligation it is to maintain/repair the site, or defects therein, dispute resolution, and what happens if the relationship is terminated.
Shareholder Issues
The final consideration on this legal checklist involves the relationship between the owners of the business. If one person is the sole owner of the business, this last consideration may not apply. However, to the extent that various individuals are operating as mutual owners, shareholders, or partners in a particular business venture, their relationship between each other must be clearly set forth and agreed to in an operating agreement or a shareholder agreement. Inevitably, disputes will arise, and some method must be set forth in writing to address how those disputes will be resolved. The worst scenario is a corporation equally owned by an even number of shareholders, which allows for a deadlock in decision making to occur. In the event of a deadlock, the corporation or business entity may be thrown into receivership, whereby a receiver takes over the operation and decision making functions, so that the business can continue to operate despite the deadlock between shareholders or owners. This is all expensive, time consuming, and emotionally draining on the owners, and should be avoided at all costs. The development of an operating agreement between the owners is a critical part of the creation of the business venture, and the best time address difficult issues between business partners is at the beginning, when there are no disputes. Many issues typically addressed in the shareholder agreement are not often considered or anticipated by the owners, such as the event of death or disability of one or more of the shareholders, the desire to sell shares to a third-party, rights of a divorced spouse to all or part of the business, and other such uncomfortable matters. Many of these concerns can be addressed by simple legal tools like insurance, trusts or incorporation of rights of survivorship into the ownership structure. All of these issues should be considered and addressed before any disputes arise to allow for the smooth functioning of the business and the efficient resolution of disputes or major decision making.
Conclusion
The above checklist represents some of the typical legal matters commonly encountered by online sites. Of course, many others are possible, and your general counsel can explore these numerous legal concerns in-depth. The best time to address of these legal matters is before a legal concern arises, forcing the business into "emergency mode." Many legal emergencies can be avoiding with minimal preparatory activity, whereas failing to address important legal concerns can result in major disruption, or even destruction of, your online dating business venture.
Coming Soon... www.OnlineDatingLaw.com, by Lawrence G. Walters, Esq.
(©Lawrence G. Walters, PA 2005). Nothing contained in the forgoing article constitutes legal advice, and all specific legal questions should be directed to your personal attorney. Lawrence Walters practices in the areas of online dating, media and advertising law. The law firm of Weston, Garrou & DeWitt has existed for over 40 years, and has litigated media cases throughout the country, including 7 cases at the Untied States Supreme Court. Mr. Walters can be reached at Larry@LawrenceWalters.com, www.FirstAmendment.com, or via AOL screen name "Webattorney."
