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9 March 2021

The Big 5 legal considerations when running your online platform in SA

Your online platform is about to be up and ready, and you are excited to become the new Amazon in South Africa. Suddenly you remember that just like any other regular brick-and-mortar store, you are going to need to think about the legal considerations applicable to hosting and operating an online platform in SA and globally.

Just because your online platform is intangible, and it may not even do much (or it may offer a myriad of services and products!), every single online platform in SA needs to consider and adhere to various salient legal facets which are applicable to your platform. At the end of the day, your platform is like a stage in real life, and you as the stage manager need to ensure that everyone sticks to the rules, otherwise your show can go really badly, really quickly!

From Legalese having engaged with thousands of SMEs who operate a business online, and subsequently analysing and solving their legal woes, we thought that we would garner this experience and share some of it with you, in the hope that our Big 5 Legal Considerations will help you start in the right direction for legal certainty, and the hopeful minimisation of risk for your online operations.

Your online business needs to be founded upon real contract-backed relationships and may be subject to foreign laws in conjunction with local laws

Just like a brick-and-mortar business, always ensure that all of your work relationships, whether internal or external, our founded upon comprehensive agreements detailing core provisions and every contingency. Without these, your inevitable disputes become drawn-out and expensive, whilst investors and even staff cannot rely on your operations for predictability.

Also make sure that your online operations adhere to all applicable local and foreign laws. To know what law applies to your operations, ask yourself: to whom am I supplying my services, where am I operating, what am I doing, when do I do it and how do I do it. These questions will guide you in discovering the legal regimes applicable to your operations. If you do not follow the law, not only will authorities possibly shut you down or penalise you, but your customers will not trust you, and competitors will be tempted to report you.

Lastly, your online business must actually be managed by a legitimate, registered company, in SA or somewhere else. This is to ensure that your engagees have recourse to a real entity, should something go right/wrong with your intangible online entity.

Know what constitutes your intellectual property, and then protect it

Your online company’s intellectual property is probably its biggest asset, but unfortunately, the current slew of intellectual property (“IP”) laws in SA are outdated, and in worst cases, specifically exclude any protections for online operations (e.g. copiers of your UX interface can avoid liability under the Copyright Act by simply changing the background colour of your page).

To avoid IP issues, understand exactly what your IP is (i.e. underlying software, UX interface, licensed photographs etc.), and discover the best legal way to protect it outside of the formal IP laws; whether through the use of a comprehensive IP policy in your website’s Terms & Conditions, or the use of watermarks or dummy code.

https://store.legalese.co.za/product/combined-website-policy-customised-un-regulated/

Have comprehensive Terms and Conditions of Use and Service

Your website is effectively a bar where anyone can come in and enjoy themselves. If you do not have rules at the entrance to your bar, entrants can do whatever nefarious things they want, without you being able to do anything about it. As such, just like all bars have rules at their entrance, your website must have comprehensive Terms & Conditions upon first landing, and available at anytime the user needs to make an informed choice.

Apart from being a functional necessity to protect your interests, you also need comprehensive Terms & Conditions to contain clauses which satisfy the laws applicable to the services/products you dispense from your online platform. This includes, amongst a dearth of other applicable requirements, having sufficient Returns/Refunds/Cancellation terms on your platform to satisfy the Consumer Protection Act for online transactions.

Your platform’s Terms & Conditions need to be clear and user-friendly, in order to explain the balance between the user’s rights and yours. Being clear, they will allay 99% of user or regulator fears, limiting the chances that your operations will be subject to investigation or problems.

Keep in mind, that whatever you advance as your policies in your Terms, must actually be manifested in real life. In other words, what you say, you must actually do.

https://store.legalese.co.za/product/website-privacy-policy/

Understand and apply the laws around personal information/data protection: POPI and GDPR

With the advent of the EU’s Genera Data Protection Regulation (“GDPR”) in May 2018, and to a lesser extent, SA’s Protection of Personal Information Act (“POPI”) from 1 July 2020, the control of user data is back in the hands of the user. It is a big mind-set shift.

You have to ensure that your company’s interests and needs relating to the user’s data are fairly balanced against the user’s rights relating to privacy and data ownership.  

You strike this balance by adhering to the “Mandatory Information” and “Mandatory Actions” elements of GDPR or POPI, by essentially, having a comprehensive Data Protection Policy on your site, and then to manifest the range of rights which online users now have under GDPR and POPI.

https://store.legalese.co.za/product/combined-website-policy-un-regulated-goods/

Get a good lawyer and legal advice

Preventing legal issues is far cheaper and easier than curing them when the litigation starts.

Having your “legal ducks in row” at all times espouses reliability to your customers (especially in the realm of intangible online platforms), compliance to the authorities, and excellent potential for your investors.

Try use modern legal advisors, and not archaic law firms, whenever you can, as they are usually cheaper and more flexible than traditional, monolithic firms, and usually understand your modern online operations far better.

Start your legal compliance as early as possible, as it will be cheaper to design your endeavour lawfully in the first instance, than having to re-engineer all of your operations, relationships and rules once everything is already setup and running for years.

Keeping the above in mind when initiating and running your online platform will enable you to sleep better at night, knowing that there is always a planned path to available solutions, which are tailored to you, cheaper than curing issues, and ready for you whenever you need them.

https://store.legalese.co.za/product/legal-consultation/

Thomas Reisenberger – 9 March 2021

Have any questions? Drop us a message below and we’ll be in touch!