Jaburg Wilk

News/Publications

Know Who You Are Doing Business With On the Internet

Categories: Intellectual Property, Internet and Technology, Article

T&C due diligence

We are all used to clicking the "I agree" button and frequently we click without reading the lengthy terms and conditions.  While many are long, these virtual agreements bring with them rights, responsibilities and restrictions.  By clicking "I Agree", you have created a contract.   In the on-line order process, frequently you will click on an agreement button, again creating a contract.   While we easily create contracts on the Internet, there may be uncertainty about the most basic term of a contract - the identity of the party that you've entered into a contract with.

Before you hire a service provider or order goods on-line, know who you are doing business with.  This is a simple concept.  Due to the ease of on-line purchasing, people are frequently entering into contracts without knowing the person or business on the other side of the computer screen.

Even Small Companies Look Big Online

The Internet has long been known as "the great equalizer."  A technologically savvy web developer can design a website for a small company that rivals that of a large corporation.  A professional and robust website may signal stability and a great company to do business with, but it could just as easily be a cash-strapped start-up organization. Investigate the company beyond just visiting and viewing their website.

  • If ordering goods:
  • Check seller ratings if available.
  • Order using a credit card, as the credit card company may assist you in attempts to get your money back that you spent on an order.
  • We do NOT recommend using a debit card for any on-line purchases.
  • Consider using a single credit card with a very low limit for all on-line purchases.
  • Check consumer sites such as www.ripoffreport.com to see what other's experience has been with this seller.

Example: Hiring a Web Developer

If you are considering entering into a contract for services or ordering goods that have substantial value, engaging in basic due diligence is not time consuming and it is a better alternative than trying to find someone after they owe you money or you have received a defective product.  For example, you are looking to hire a web designer to create a website for your company.  Steps that you would likely take to find a developer are:

  • Seek out a web developer on the internet
  • Ask for referrals from other business owners
  • Interview someone that you met at a networking event
  • Traditional media advertising

It is likely that the developers will come to your office to make their presentation or they might even perform their services on-line through a webinar or web meeting.  Chances are good that you will never visit their office.  If your new website is unacceptable, or the website was not completed after you made a payment or paid a deposit, do you have the information to get your money back or to file a lawsuit if necessary? Before you decide to do business with an individual or company, consider the following:

  • Make sure you have verified the physical address of the person or company.  A physical address is usually necessary to serve the person with a lawsuit.  Even if the address does not look like a post office box, check it out on the Internet using one of the map tools such as Google Maps or Mapquest.  One of our clients found out that the address for the service provider was actually a UPS Store.  Not surprisingly, the address was no longer accepting mail because the service provider had not paid their bill to the UPS Store!  We knew it was a UPS Store because we looked at it on Google Maps satellite and saw a shopping center rather than the home office.  There are many other ways to use the Internet to confirm an address, including directory listings and property tax records.  If you only have a post office box for an address, you will want to perform some additional due diligence.
  • For businesses, check with the Arizona Corporation Commission - http://www.azcc.gov/divisions/corporations/contact.asp to check the status and validity of the company and verify contact information.  It will also list the statutory address for the corporation and their address.
  • Some businesses are licensed by the State such as a contractor, electrician, plumber, or handyman.  Check for state licensing information with the Arizona Registrar of Contractors at http://www.azroc.gov/ to be sure the business has the appropriate license.  You can also see if any complaints have been filed against the business. The state website, www.azsos.gov has "business filings" link that will also provide information about companies doing business in Arizona.

While very brick and mortar, you could always take a drive to see the physical business and make a site visit.

Spending a little time before you click the "I Agree" button or enter into a contract with a previously unknown service provider can protect you and your company.


About the authors:  Maria Crimi Speth is an IP attorney and is a shareholder in the Phoenix business law firm of Jaburg & Wilk PC.  She heads the intellectual property law department and assists client with trademark, IP law and Internet issues.  Maria is a frequent speaker on intellectual property law and is the author of the book, Protect Your Writings, a Legal Guide for Authors.