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Cyberlaw Consumer Protection Issues
The long-arm of U.S. state consumer
protection laws
Essentially, the courts are finding that
simple Internet activity, advertising a product or service via a Web site, may
be sufficient to submit its operator to the jurisdiction of most courts in this
country. Scrutiny of the appropriateness of the material provided at the site
becomes even more significant, and a 50-state survey must be conducted by
counsel for the Web site operator prior to submission of any information which
might be deemed solicitations or advertisements on the Web site.
Missouri has the first published case where a state is asserting jurisdiction
over a Web site operator from another state based upon its consumer protection
laws. In State of Minnesota v. Granite Gate Resorts, Inc., No. C6-95-7227
(Ramsey County MN 1996), the attorney general of Minnesota brought a consumer
protection action against the owner and operator of a Nevada gambling
establishment. The defendant offered a gambling service called "WagerNet," which
the establishment of an account in order to place bets. Disputes regarding the
account would be submitted to the courts in the user's home state, or to an
offshore court in Belize.
When the consumer protection action was
filed in Minnesota, WagerNet moved to dismiss for lack of personal jurisdiction.
Based solely on the fact that the site had been accessed by many Minnesota
Internet accounts, the court held that the defendants were amenable to the
jurisdiction of the Minnesota courts.
Although it cited to the fact that account
holders can be sued in their home state (presumably Minnesota in this case) as a
condition of defendant's opening an account, the court held that placing the Web
site and its advertisements on the Internet was "crossing the Minnesota
borders," and that the Web site operator had purposefully availed itself of the
privileges of doing business within Minnesota merely by maintaining its
advertisements and Web site on the Internet.
California has been asserting consumer
protection jurisdiction over businesses on the Internet which sell products to
purchasers in that state since 1997 and adds new legislation regularly.
California Business & Professions Code sec. 17538, which became effective
January 1, 1997, requires Internet merchants to disclose their identity and
information regarding the merchant's return and refund policy. Other laws deal
directly with privacy and protecting consumers. Websites now must have a privacy
policy if they collect information from any California resident and since 2002
if a company determines there is a breach of security and the personal
information is released, everyone whose information could have been released
must be contacted.
Bottom line, lawyers for companies doing
business on the Internet or merely maintaining sites on the Web must be
cautious. Our clients may be hailed into court in a foreign jurisdiction, with
surprising results. Until the laws become more uniform, 50-state surveys should
be conducted and the lowest common denominator adopted. In addition, careful
disclaimers should be prepared limiting the reach of the site and the purpose of
the site.
This exciting new world can also be a
dangerous one for the unwary Web site operators, and cyberlawyers need to be
prepared to lead our clients through the minefields of uncertainty.
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Parry
Aftab, Esq., 
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