Archive for July, 2011

Advertising standards and Groupon

Earlier this year, in response to the changing nature of online marketing, the Committee of Advertising Practice extended its Code (the “CAP Code”) to cover “advertisers’ own marketing communications on their own websites and in other non-paid-for space online under their control”.

This means that the Advertising Standards Authority (“ASA”) (the independent, one-stop-shop that investigates alleged breaches of advertising codes, including the CAP code), is now able enforce the withdrawal of all online marketing messages that don’t meet the CAP Code, including those which are on companies own Twitter or Facebook profiles, and also those which are contained in companies’ own promotional emails.  (Of course, the ASA is an advertising industry body – so don’t expect too much from it – you may recall my blog about its remarkably permissive Bodyform adjudication in March.)

Nevertheless, a high-profile consequence of the extension of its powers is that the ASA appears to be considering complaints against emails sent by “deal of the day” websites, and has already upheld 2 such complaints against the biggest “deal of the day” website in the world, Groupon.  The adjudications can be read here and here.

I treat the Groupon offers as more or less “advertising puffs” – that is, unenforceable advertising claims that no reasonable consumer would take seriously. I expect a discount to be involved, but not on the sensational “90% off” sort of scale routinely indicated. 

Perhaps this indifference is because I have viewed Groupon as a passing fad, like those ghastly rubber charity wristbands that everybody used to wear, or MySpace. My hunch is that the business model doesn’t have legs.  (Douglas says that once I get married I may feel differently – I have referred him to the European Financial Review, which backs up my hunch with all sorts of fancy analysis – and Douglas has, in turn, referred me to his wife’s monthly 3-figure Groupon spend…)

However, if lots of less cynical folk than myself (like Douglas’s wife, and, admittedly, my fiancee) are giving Groupon their money, then it’s a good thing that the ASA is regulating it (even if the only punishment which the ASA can at present enforce is the withdrawal of the unlawful communication).  Groupon should also beware of the Unfair Trading Regulations 2008, and their general ban on unfair commercial practices – various parties entitled to enforce the Unfair Trading Regs may not decide to look upon Groupon’s advertising as benevolently as I do.

Overall this blog post is a decent reminder that businesses shouldn’t get too carried away when stating the brilliance of their product or service, even if it’s just words contained in a throwaway tweet or blog. With that in mind, I’ll let the Law Society of Scotland Journal boast about Brodies LLP on our behalf.

Using e-signatures to sign contracts – what are the legal issues?

Adobe yesterday announced that it had acquired electronic signature provider Echosign. Adobe’s intention is to integrate Echosign’s products and tools into Adobe’s PDF format/Acrobat products. Echosign’s tools allow users to electronically sign a document, or apply a traditional (inked) signature that is scanned and then incorporated into a PDF of the “signed” document.

Douglas has blogged previously about exchanging PDFs of inked signature pages, but I thought it might be worthwhile to look at the use of so called electronic signing.

Signing documents electronically
We have a number of clients that use tools similar to Echosign to allow contracts to be signed electronically. There are a number of advantages to these products – signing documents is quicker and easier, and avoids the need for physically delivering and retaining a “wet” signature page.

For standard commercial contracts, using products like Echosign generally doesn’t cause any problems from a legal perspective, but there are some things to watch out for:

Who has actually signed?
An electronic signature is generally appended by a user receiving an email that then takes the user to a website that allows the user to “sign” the document (perhaps using a unique signature key). Whilst the e-sign tool will provide evidence of the signature being appended, if the e-mail is accessed by a third party (eg someone who has access to that e-mail account) it would be open to one party to say that he/she had not signed the contract; it had been signed by someone else/someone who did not have authority. The e-sign tool does not provide evidence of who signed the contract.

In one sense, this is no different from the use of “real” signatures in the offline world where it is definitely possible for someone to say that their signature had been forged. In each case, the onus on proving that the document had been signed by the person whose signature it purports to be will fall on the person who is trying to allege that there is a valid contract. Evidentially, however, this is probably easier to do when comparing inked signatures.

Many organisations using e-sign services will take comfort from the fact that once the parties begin performing their obligations (for example, providing services and paying invoices) it will be harder for a party to argue that it was not bound by the contract because it had not signed it.

Data Protection
Many of the companies providing e-sign services are based in the US, and will host your contracts (and data about signatories) on their servers. Data protection laws contain specific rules in relation to the transfer of personal data outside the EEA. Generally, the US is not considered to provide an adequate level of protection of personal data for the purposes of European data protection legislation. Any organisation that decides to adopt such a system for signing its standard customer contracts should highlight to its customers that the data they submit may be held in the US and held by the e-sign provider subject to the terms of its privacy policy.

If the contracts contain personal data (for example, about employees) then this will be more problematic.

Confidentiality and liability of the e-sign provider
More generally, organisations may also wish to consider whether they are comfortable with commercially sensitive contracts (or contracts containing personal data) being hosted in a third party repository, and whether the service provider has in place appropriate information security controls.

In particular, you may find that the e-sign provider’s standard terms are weighted heavily in the e-sign provider’s favour. I have seen standard terms foir e-sign services that contain no confidentiality obligation by the e-sign provider in favour of the user. This will cause particular concerns where copies of contracts are being held/hosted by the e-sign provider.

Data ransom
Finally, remember also that these services are generally delivered using the software as a service model. If you decide to stop using the service, can you get access to your archive of contracts and associated data? Is it in a useable form? Again, Douglas has blogged on this.


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