Emerging Business Risks in an Online Era
Recently, a focus has been placed on job applicant rights in regard to employer access to their Facebook profile and online identity. The story of Justin Basset, a New York-based statistician, who was asked for his Facebook login during a job interview, helped bring these concerns to light. In a Web 2.0 world, the “Facebook effect” isn’t limited to job applicants and employee privacy.
Now, more than ever before, small businesses and independent consultants are using these high traffic online portals to advertise and market their businesses. This is an effective way to maximize awareness and impact while simultaneously reducing overhead and marketing costs. An online presence however, comes with risks that a small business or consultant should consider.
Implied relationships – Online communication without a contract
When you have a Web site or other online portal it becomes very easy for customers and prospective customers to contact you. Online consultations can go on for quite a while as they ask questions, seek feedback, request quotes, and establish performance expectations. In a traditional business environment, these consultations would usually be over the phone or face to face and representations would be verbal, rather than written. Once the parameters were agreed upon, a tangible contract would be signed by both parties to officially initiate your duty to the client.
In absence of a written contract however, it is difficult to tell when or even if the agreement ever becomes formalized. What many consultants and business owners don’t realize is that the ongoing online communication forms a virtual paper trail that can be used against you. In the event of a dispute, the initiation of the relationship, and consequently the business owner’s liabilities, can be ambiguous. A client can assert that you violated their trust and privacy and have plenty of evidence to use to try and prove it.
In the legal or medical field these discussions are a matter of attorney-client privilege or patient privacy. However in other business relationships this becomes a large grey area littered with potential exposures.
Misrepresentation – Advertising that may over sell your services
Business owners make every effort to stand out from the competition. Web sites, online advertisements and promotions are all designed to inform, educate and impress prospective clients in order to generate a perception of quality for the work you provide. The Web is a great medium to showcase past work and build a sense of trust and confidence in your capabilities. Advertising is ultimately setting up expectations for the business owner’s ability to execute on promises of timing, quality and effectiveness of the services offered.
When a client feels that those promises weren’t kept, the same information used to help sell the client can also be used against the business owner. In the case of a dispute, the testimonials and statements remain public record and can easily be used to support a claim against the consultant or business owner.
So before using Web sites, online portals or other online advertising, a business owner or consultant should be aware that they face certain added risks by using technology to build their business. Despite being “online” and “virtual,” these methods also generate a paper trail that can be used against you. Even in the event you did not do anything wrong, the cost just to defend against a claim can become costly. Thankfully, affordable, easy to obtain professional liability insurance can help manage this risk.
BizInsure Guest Blogger: Jarrett Jeppesen
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