Category Archives: Business Law

Online Business Law: Is Your Auto-Renewal Setup Compliant?

Auto-Renewal online checkout rulesA lot of online businesses are running auto-renewal subscriptions that shirk FTC regulations.

Auto-Renewal Subscriptions: Common and Convenient

Auto-renewal subscriptions are a win-win for companies and consumers. They afford businesses better forecasting abilities and improve retention rates. For users, automatic renewals and payments save time and money (late fees be gone!).

Auto-Renewal Subscriptions: Compliance Standards

Authorities Slap eHarmony With Auto-Renewal Legal Action

Businesses must understand that Auto-renewals are bound by nuanced compliance standards. In fact, authorities from four California counties recently slapped  online dating platform eHarmony with a lawsuit because the company allegedly “did not clearly and conspicuously explain the automatically charged subscription fee, did not provide the consumer with their dating contract, or explain their right to cancel as required by law.”

To be fair, it doesn’t appear that eHarmony purposefully tried to pull the wool over customers’ heads, but they did overlook standing regulations. In the end, the dating website settled; it paid $1.28 million to the claimants, and an additional $1 million to affected consumers. Site updates are also part of the deal.

The FTC Is On The Prowl For Auto-Renewal Violators

It’s also only fair to note that eHarmony isn’t an outlier when it comes to auto-renewal legal troubles. Blue Apron, Birchbox, and LifeLock have all tangled with the FTC over the issue.

Just as the FTC is stepping up social media marketing enforcement, the agency is also cracking down on auto-renewal compliance. To make matters even more critical, on July 1, California will press play on a new auto-renewal law.

Use Several Disclosures throughout the Checkout Process

A single notification or clause buried in a user agreement doesn’t cut it. Auto-renewal compliance is a multi-tiered process. The checkout notifications must conspicuously feature several “We Will Charge You On A Regular Basis” warnings at specific points.

Companies that offer free trial periods must clearly publish the post-trial price, recurrence schedule, and cancellation information before the final checkout page. Make sure to delineate device restrictions, as well.

The final checkout page should include:

  1. A summary of all the disclosures and terms;
  2. A clear link to the terms of service, with a checkbox the user must tick to indicate their agreement;

Once a purchase is complete, users should be presented with a confirmation page that conspicuously gives cancellation information and contact information.

Remember, it’s almost always not enough to state a disclosure once. Complying with FTC standards means including disclosures several times throughout the online checkout process.

California’s New Auto-Renewal Law (ARL)

California’s auto-renewal law (ARL) requires companies to implement online cancellation options for online auto-renewal subscriptions. To put it another way: On July 1, it will be against regulations to only provide call in, or mail cancellation options for auto-renewal subscriptions initiated online. Moreover, to comply with California’s auto-renewal laws, companies that offer subscriptions with renewal periods longer than 30 days must remind users, 30 to 45 days in advance, of the impending auto-renewal charge.

Connect With An FTC Compliance Lawyer

Now is the time to review your online checkout process and concomitant SaaS and subscription agreements to ensure they comply with federal, state, and local regulations. Believe it or not, depending on your client base, you may even have to contend with E.U. online privacy and e-commerce regulations.

We can help you sort through the FTC compliance maze. Let’s chat about it. The consultation is on us.

A “Patent Troll Lawsuit” Landed In My Lap! Now What!?

patent troll lawyerThey’re baaaaaaaaaccccck. Patent troll lawsuits, that is — and they’re targeting small businesses. If one lands in your lap, stay calm and don’t rush to pay; the plaintiff may be a troll, and you may not be at all liable.

Patent Troll Lawsuit: They’re Calculating You’ll Just Pay Without Exploring The Validity Of The Claim

Naturally, it’s intimidating to get an official-looking, accusation-strewn letter, from a complete unknown, demanding that you fork over $1,000 per employee or face a protracted lawsuit. In fact, it can be so nerve-wracking that many smaller companies opt to pay without researching the issue, which is what many patent trolls count on.

Unfortunately, additional troubles may lurk around small businesses that appease. Why? Well, “trolling” companies and their lawyers tend to know each other and share information. So, parties that just pay up, wind up with more questionable lawsuits landing in their laps.

Why do Patent Trolls Target Small Businesses?

For years, patent assertion entities made money by suing large corporations across the country.

However, things changed in May 2017 when the Supreme Court ruled that claimants could only sue companies for patent infringement in their state, which made things more difficult for assertion entities to carry on business as usual. So, they went hunting for new targets — smaller companies and startups.

Patent Troll Lawsuit: It Can Happen to You

Lately, patent trolls seem to be spawning exponentially. If you’re stung, some options:

Has A Patent Troll Targeted You?

Is someone trying to sue you for patent infringement? Gordon Law Group helps entrepreneurs, startups, and businesses with so-called “patent troll” lawsuits. Succinctly stated: We know how to shake them; and under the right circumstances, patent trolls can be forced to pay your legal fees!

Get in touch today to see how we can help you fight back against a patent troll. Consultations are free.

Puerto Rico Tax Haven: Best For Internet Businesses

Puerto Rico tax havenLooking for a “tax haven”? Consider Puerto Rico. The U.S. territory passed two laws which offer significant tax benefits to lure businesses and residents to the island.

Puerto Rico is a U.S. Commonwealth; it’s part of the US, but enjoys a level of independence that includes tax breaks not available in other states and jurisdictions.

Puerto Rico Tax Haven: Act 20 Basics

On January 17, 2012 Puerto Rico enacted the “Act to Promote the Export of Services” — a.k.a., Act 20. The provision bestows tax exemptions and credits on businesses engaged in eligible activities on the island. To leverage Act 20, businesses must apply for a tax concession and obtain an exemption decree. The decree is available for 20 years, with a possible 10-year extension.

Puerto Rico offers generous tax incentives to eligible businesses. For example:

Puerto Rico Tax Haven: Act 22 Basics

At the same time, Puerto Rico enacted the “Individual Investors Act” — a.k.a., Act 22. A resident cultivation attempt, the law obliterated all manners of tax obligations. Eligible participants enjoy:

Exemptions under Act 22 are valid through December 31, 2035.

Puerto Rico Tax Haven: Act 20 and 22 for Internet Business

To make conditions even more attractive, Puerto Rico recently eliminated the five employee requirement. After moving your business to Puerto Rico, you will only pay 4% on Puerto Rico sourced business profit. And if you yourself move to Puerto Rico as well, you can then pay all the profits as dividends to yourself which are 100% tax exempted. Therefore, since many internet businesses are highly portable, relocating to Puerto Rico is relatively easy and may give you one of the most competitive tax incentives around. Besides, the year-around summer weather!

Disclaimer: This article is not intended to provide legal advice. Please consult an attorney for legal advice for your particular situation.