Website Audits: It's Important to Be Compliant

In today’s digital age, ensuring your company’s website is compliant with various laws and regulations is not only essential but can also be complex with many different “moving parts”. Whether your site is a simple platform merely advertising your goods or services, an e-commerce hub where orders are taken and sales are made, or a highly interactive portal where users can engage with each other and post various types of content, it must adhere to numerous state and federal regulations, as well as suggested best practices. Even if your business complies with a specific state’s laws, there may be federal ones that still impose additional requirements—or vice versa.

Why Compliance Matters

Non-compliance is not just a legal issue, however; it can impact your business as well and have far-reaching consequences.

Here’s what can happen if your website’s compliance is lacking:

• Legal Ramifications:
• Federal Actions: Agencies like the Federal Trade Commission (FTC) can initiate enforcement actions, leading to public governmental scrutiny, restitution payments, fines, penalties, and long-term obligations. And if the FTC leads the charge, states are often not too far behind.
• State Actions: State Attorneys General can bring enforcement actions just like the FTC can. And these often attract attention from other states if your business operates nationally or in multiple jurisdictions. So, while there’s only one FTC, there are 50 Attorneys General who can initiate their own enforcement actions, which can overwhelm a company’s resources.
• Individual Lawsuits: Consumers can sue your company for damages or other remedies in some instances. And if their lawsuit gets any traction in the media—even for a short time—then other consumers may file suits as well.
• Class Actions: Multiple plaintiffs can file class action lawsuits if many people are affected by your website’s non-compliance.
• Reputational Damage: Negative media coverage of legal issues, whether justified or not, can tarnish your company’s image and significantly impact its bottom line. Customer trust is crucial and any perceived misconduct when failing to comply with various laws, whether intentional or not, can result in lost business.
• Customer Loss: Consumers are likely to abandon your company if they believe their legal rights are being violated and not respected (like privacy, for example). This erosion of trust can lead to a significant drop in customer loyalty and revenue and drive them into your competitors’ arms.
• Cybersecurity Risks: Failing to comply with security standards can expose your website to cyberattacks, unauthorized intrusions, and data breaches. If sensitive customer information is compromised, it can lead to lawsuits, financial losses, and reputational damage.
• Hindered Growth: Non-compliance can block your company from expanding into new markets or forming valuable partnerships with businesses that demand compliance as a condition of the relationship (which is common). This can stifle growth, waste valuable lead time, and reduce competitiveness.
• Operational Disruption: It takes time, money, and energy to address non-compliance issues. Allocating your company’s limited resources to do so causes disruptions in daily operations and can delay or even prevent you from achieving key business goals.

Staying Compliant

To avoid these risks, it is crucial to:

• Stay informed about relevant laws and regulations affecting your business and industry.
• Regularly review and update your website’s compliance measures.
• Seek informed legal guidance when necessary.

Takeaway:

A website’s legal compliance is essential for protecting its business from governmental and private legal actions, maintaining a positive public image, and ensuring customer trust and loyalty. The risks of not doing so—from legal penalties to reputational damage to disruption of company operations—highlight the importance of being diligent and proactive in this area. Compliance is not just a necessity; it’s a cornerstone of a responsible and successful business.

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