"The Secrets To Saving & Making More Money Online Using Little Known & Easy To Implement Legal Strategies In Your Internet Business!"
Introduction: Protecting Yourself – And Your Customer
If you are a „netpreneur – if you have managed to build and continue to operate a successful business in cyberspace – you‟ve come to appreciate just how much easier Internet commerce is. Many of the traditional issues faced by small businesspeople – such as setting up an actual storefront and having to pay rent or a mortgage on the building, having to have liability insurance, finding storage space for merchandise (if applicable), not to mention having to deal with municipal codes and zoning laws, licensing, and more – are not applicable in cyberspace. An internet business can be operated right from a spare bedroom in your house, and if you‟re actually dealing in tangible goods, you may never have to store or even see them as successful online auctioneers will attest.
An internet business faces many of the same tax and liability issues as a brick-and-mortar business, however. And unless you‟ve been on a desert island for the past twenty years, you‟ve probably come to realize that the business law in the U.S. tremendously favors corporate interests, providing them with rights, privileges and protections that are simply no longer available to individuals and the mythical “little guy” (by which we mean the “Sole Proprietor” – read on).
The reason goes back to a little-known amendment inserted by a law clerk on a case dating back to 1888. In this case, Santa Clara Co. vs. Southern Pacific Railroad, a law clerk wrote his own words into the judge‟s opinion that essentially gave corporations the same rights under the 14th Amendment of the Constitution as natural human beings. The 14th Amendment states:
“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
Since then – and especially over the past twenty-five years – large corporations have used this status to get involved in the political process, influencing lawmakers to pass legislation in their favor that have allowed them to grow tremendously in size and power.
Because of various abuses and the healthy, traditional American fear and distrust of any person or institution grown too large and powerful, recent years have seen the beginning of a backlash against corporate power and the doctrine of “corporate personhood.” This has in turn led to some strange perceptions among many that corporations are somehow evil and destructive to democracy.
The fact is, a corporation, in and of itself, is neither good nor evil. It is simply a tool – a “legal fiction” that allows entrepreneurs to incur some risk without danger of losing everything they own. While it may be true that these laws have been misinterpreted, twisted and abused by many powerful, wealthy groups of men (and the occasional woman), these same laws can be used to your advantage when it comes to protecting yourself and your assets. These laws don‟t care whether yours is a multi-billion dollar operation or consists of just one person. Your small, home-based Internet business can enjoy the same protections as Bechtel or Halliburton – and having an “LLC” or “Inc.” after your name can add a great deal of credibility as well as open the doors to the same types of opportunities! Best of all, you will enjoy the same protections and tax advantages.
These issues are covered in the first part of this book and can be applied to both online and “brick and mortar” businesses. The second part – starting in Chapter 5 – deals with an area of business law and regulation that does favor the consumer over Big Business as well as Small. Recently, a major manufacturer of athletic shoes was sued in the California courts over misleading ads. The corporation‟s defense was that they had a right to lie under the First Amendment.
Oddly, the ACLU filed an amicus curiae brief on behalf of the defendant. Despite this and the economic power of the corporation, the California Supreme Court ruled in favor of the plaintiff, stating that false statements are in fact, not protected as “free speech” under the First Amendment.1 This judgment was appealed to the U.S. Supreme Court, who (to the disappointment of both sides) chose not to hear the case.
The point here is that even in the current pro-business, pro-corporate legal and political environment, when it comes to deceptive or unfair advertising and marketing practices, the law continues to side with the consumer. The Federal Trade Commission has always had its hands full trying to stay ahead of the technology and techniques used in advertising. The advent and exponential growth of e-commerce and Internet business has accelerated this whole process, as technology changes almost on a daily basis. Currently, the FTC has come up with a series of guidelines for online advertisers, which are discussed in the second part of this book.
As a netpreneur, it‟s a good idea to understand where the FTC stands on the issue of fair advertising practices, and what the expectations are. This way, not only will you stay out of trouble, but your business will gain respect and loyalty from customers who always know what to expect.
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