Break-ins aren’t the only threat to your business. A costly lawsuit could put all of your hard work in jeopardy. You’re likely already taking steps to avoid major infractions like fraud and gross negligence. But as you grow your business, there may be instances where you unknowingly open yourself up to a lawsuit. Keep reading to learn how to spot potential liabilities.
1. Research trademarks, copyrights and patents in your industry
You’ve come up with a great idea for a new business, product or service. But were you actually the first one to come up with the idea? Trademarks, copyrights and patents distinguish your products or services from others in your industry and protect ideas.
A trademark ensures the visibility of a business through symbols, words, phrases and designs. Copyrights protect original works of authorship, such as photographs, music and books. Patents protect inventions and give inventors rights over the mechanisms, principles and components of their work.
Before you name your company, start selling a new product or brand your business, you should make sure that you aren’t infringing on anyone else’s intellectual property rights. Get started by conducting a trademark name search. Visit the U.S. Copyright Office online to take a look at the United States Patent and Trademark Office’s online database.
2. Be as transparent as possible
Tricking your customers into believing they’re getting a better deal than they actually are is never a good idea. Customers are more easily lost than won, and being transparent and truthful is a best practice for any business.
This kind of transparency extends to your business practices, the ingredients or materials you use, your refund and cancellation policies, as well as information about where you’re sourcing your products. You don’t want to give a false impression about who you are, what you do or what you stand for. According to the truth-in-advertising laws established by the Federal Trade Commission, all ads “must be truthful, not misleading, and when appropriate, backed by scientific evidence.” You can visit the FTC’s website for information on how to responsibly make health and fitness claims, issue gift cards and more.
3. Put a disclaimer on your website
A disclaimer protects your company from liability claims. For instance, a toy company might have a disclaimer that states their products contain small pieces that could be swallowed by small children. This would help ensure that you are not held responsible for any injuries or other damages that may result from the use of your products.
What you include in your disclaimer and the complexity of the content will depend on the type of business you operate. A yoga studio might want to have a disclaimer that advises people to speak to a doctor before beginning a new workout regimen, while an energy bar manufacturer would probably want a disclaimer that says their product contains peanuts to warn people with allergies. Disclaimers not only protect your company from a lawsuit, but also help keep your customers safe.
4. Get permission to use customer content
User-generated content (UGC) has become a vital part of most business’s social media and email marketing plans. Sharing a comment or photo of a customer enjoying your products or services is an excellent way to show your appreciation, build relationships with your audience and validate claims you’ve made about your offerings. To protect your customers’ privacy and the legal rights they hold, you should always ask for their permission in writing.
5. Know your limits
As a business owner, you want to give your customers great experiences. It can be tempting to offer amenities you don’t yet have the ability to provide. For example, a restaurant might present itself as a great place to hold a wedding reception, yet it might not have enough servers or ovens to meet the demands of a large party.
Try never to over-promise and under-deliver. To avoid legal issues or disputes with dissatisfied customers, you should know your limits. How many people can your facility accommodate? If you’re a landscaper, will you actually be able to install the fountain that was included in your blueprint? The promises you make are legally binding, so you have to be able to deliver what was agreed upon.
As with anything that involves your legal responsibilities and rights, it’s always best to consult a professional. In fact, seeking out the services of an attorney before you launch your business — even if it’s just to ask questions — will help you protect your investment and future.
Editor’s note: This article is intended for informational purposes only, and it is not professional legal advice. Always seek out a legal professional for needs related to your business.