NSW Commercial Law on Selling Data to External Companies?

Discussion in 'Commercial Law Forum' started by Ajay Ayyar, 29 January 2018.

  1. Ajay Ayyar

    Ajay Ayyar Member

    29 January 2018
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    I am starting a new online business.

    The business will provide a free online service where users will need register. The idea is to provide the users a single place to manage a particular type of investment, including uploading their documents.

    As this is a free service, I need to find a way to commercialise it via other methods. What I would like to do is collect the user's data and 'sell' it to external companies in an anonymised format. My specific questions are as follows:

    Note, I am located in NSW/Sydney Australia.

    1. Am I allowed to collect the user details and 'sell' it to an external company - the type of data I will be collecting is the includes the user's demographic, age group, value of assets etc? I respect privacy of course, so I intend to 'anonymise' the data.

    2. If above is allowed, is it covered in privacy laws and Terms/Conditions - what do I need to include in the 'Privacy' and 'Terms/Conditions' shown in my website, and do I need to include any other disclaimers or other info so ensure I am legally protected? Where can I get access to a template for privacy notes and terms and conditions do I can use it on the website?

    3. I have an ABN and have registered my business name but was unsure if it's best I continue as a Sole Trader or whether I should use a Private Company to ensure I am legally protected? What are the risks and benefits and what is the best legal structure for my business given my situation?

    4. Is a business such as mine (selling data) common and feasible - are external 3rd party marketing companies and other market analysis companies interested in such data, and can it be easily sold? I am figuring that selling user data would probably be of use to external companies. Are these companies interested only if I have a specific number of registrations - e.g. 500 use registrations, 1000? At which page can I sell something valuable.

    5. Can I have some other general opinions on commercilaising (monetizing) by business. It would be good to understand how other online services generate value, although they are 'free' - e.g. WhatsApp was bought by Facebook although WhatsApp doesn't actually generate any money through subscriptions - can something like my idea provide a buy-out target for other businesses?

    6. Any other legal coverage under commercial law that I should get considering my type of business?

    Kind regards,
  2. @thelawbundle

    @thelawbundle Well-Known Member

    27 October 2014
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    Whilst my online colleagues might be feeling more generous than I am - I would recommend that you:
    • organise a consultation with a commercial lawyer to discuss points 1, 2, 3 & 6. That consultation could take a few hours (some suggested lawyers here); and
    • pull your finger out re. points 4 & 5 (that is, do some research, run some financial projections, prepare a complete business plan, generally act like a sensible business-minded person etc.).
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  3. Ruby Tuesday

    Ruby Tuesday Member

    24 January 2018
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    You should speak to a lawyer to get assistance with these queries. Particularly the Privacy Policy, Terms and Conditions and business structure.

    A common assumption by some is that having a company protects them, this is only theoretically correct because the entity is created and separate. As a Director your duties to the company operations are just as important (with consequences as well for failing to act properly) and this should be explained to you in a proper forum.

    As a general comment - best you get your documents customised to your business, the cookie cutter templates can get people into serious problems sometimes.
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