Business websites - legal pitfalls
Thursday, 3 November, 2011
Author: Owen Culliney
The internet is filled with websites all functioning in different ways and servicing different industries. The functions of each website and the goals of the owners and designers mean that every website will be different. However, the law will apply to all websites irrespective of the intentions of the owners or developers.
Some websites are genuine e-commerce websites where a transaction can be carried out, partially or in full, online. The majority are brochures that do not allow online transactions, but inform visitors about the business, its products, philosophies and people. They often list job vacancies within the organisation, and provide a point of contact to the business.
Owners of websites and web developers need to be aware that the laws which apply to written documents and advertisements also apply to websites. In particular, the Fair Trading Act’s prohibitions on misleading and deceptive conduct must be kept in mind when creating any business website.
In essence, to comply with the Fair Trading Act a website must not:
- Contain statements which are factually incorrect.
- Contain statements which, although factually correct, are misleading because they omit important information.
- Misrepresent the quality or history of the business’ products.
- Cause visitors to the website to mistake the business’ products or services for those of another business, or to wrongly associate them with those of another business.
- Cause confusion as to the identity of the business which owns the website.
- Make false statements in relation to job opportunities or employment conditions.
- Engage in bait advertising i.e. advertising a price which is not really available, just to get customers in the door.
The use of website domain names provides a useful example of how these rules can apply in practice. Some businesses try to steal a march on their competitors by registering and using a domain name which is similar to their competitor’s business or trading name. The object is usually to divert people searching for the competitor's website to the business’ own website. This may cause potential customers to think that they have reached the competitor’s website or may at least lead to them being unwillingly confronted with the competitor’s advertising.
This type of conduct may result in the unlawful exploitation of or injury to the goodwill or reputation of the competitor’s business or its products. This may constitute misleading or deceptive conduct under the Fair Trading Act 1986.
The penalties for breaching the Fair Trading Act can be severe. For instance, as well as facing a conviction, a company can be fined up to $200,000.00. Other trading entities (such as partnerships or sole traders) can be fined up to $60,000.00. Courts can also issue injunctions to compel an infringing business to take down their website, order an offending party to pay damages to an injured party or release any profits obtained as a result of their wrongful conduct.
The internet is a powerful tool for business communication. However, it is important to remember the legal requirements for the old media continue to apply. If your business has a website you need to ensure that it satisfies those legal requirements. Your website must be accurate and avoid any content which could mislead or deceive website visitors.
For further information please contact:
Owen Culliney
Phone: 07 834 6688
Email: owen.culliney@harkness.co.nz
Matthew Peploe
Phone: 07 834 6671
Email: matthew.peploe@harkness.co.nz
