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Creating a Terms-of-Service policy: Expert advice for SMBs

Terms of Service agreements for your website protect you and should help your users. Ryan Boudreaux asks an expert for some best practice advice and provides some other resources for help.

Does your web site have a Terms of Service (TOS) statement or agreement? While many organizations do have a TOS statement or agreement, most of them are applied to protect the organization and not the visitor or end user. In fact, many organizations require that website visitors and users create an account and agree to their TOS, but fail to inform the users when the TOS changes or gets updated. How do you think your web site TOS stacks up with other organizations' websites that also require similar official statements? Does your small to medium sized business (SMB) use a TOS for its website?

User rights

Another concern involves the user rights which are violated when organizations utilize user content for their benefit, circumventing normal copyright laws for images, personal information, and other content. Take Facebook, for instance, which has a very broad copyright license on your content; in fact, according to Terms of Service Didn't Read, the copyright license that you grant to Facebook goes beyond the requirements for operating the service. For example, it includes the right for Facebook to transfer the license or to license it to others on their terms ("sublicense"). Also, the copyright license does not end when you stop using the service unless your content has been deleted by everyone else. Does this seem fair to the typical end user? Probably not, but Facebook continues to operate with its Full Data Use Policy and a Statement of Rights and Responsibilities, which outlines information it receives and how it is used; sharing and finding yourself on Facebook, other websites and applications; how advertising and Sponsored Stories work; privacy, and many more items that you can read from the links.

Remember the Instagram controversy on December 17, 2012? It created a user base backlash after Instagram announced a change in their terms of use that allowed them to start selling users' images for advertising. The next day on December 18, 2012, Instagram reversed themselves and said they would not sell users photos. A month after the fiasco, the photo sharing organization lost almost half of its daily active users. Do you think organizations are paying attention to their users any more or less since the Instagram hullabaloo?

Q&A with David Weslow

To get a better understanding of the scope of influence and to gauge the level of effort that SMBs and other organizations might want to consider, I asked  the respected copyright, trademark, and web domain legal expert, David Weslow (Attorney At Law, with Wiley Rein, LLP) for his insight into TOS and how it relates to SMB websites. Please note that this is general information and not specific legal advice for your organization or website.

Question: What are some of the important or key Terms of Service topics that every small or medium sized organization should have for their websites? Weslow: It is important that Terms of Service (TOS) address proper use of the site including provision of a limited site usage license and a prohibition on non-approved site uses. Where the site permits submission of content or comments by visitors, the TOS needs to incorporate provisions that provide the site owner, operator and host with protection from legal claims such as copyright infringement and defamation based upon visitors' submissions. These provisions in the TOS will also need to correspond to specific protocols that are defined by federal law for processing third-party claims related to visitors' submissions. The TOS itself should be displayed in a manner that is most likely to be read by visitors including, ideally, a requirement that visitors scroll through the TOS and click an "I accept" button before obtaining access to the site. Question: I am sure you are aware of the Instagram Terms of Use debacle that occurred in December 2012, when they announced they would sell users' images for advertising and had to backtrack after users revolted. How do you think SMBs should handle their TOS changes that might have adverse effects on their user base? Weslow: Although many TOSs provide site owners with the ability to change the terms or include new terms whenever desired, the practical impact of instituting significant changes should always be considered-even where the proposed changes are entirely proper under the law. Question: Thinking of the Instagram case, is there a way that small businesses can balance the policies that protect their organization while keeping the customers happy? Weslow: Communication with customers is very important when contemplating TOS changes that will impact customers. If, for example, a TOS change is needed to clarify copyright issues because the site is encountering increased unauthorized copying of content, an email to customers or site "splash screen" may explain the need for the TOS change as well as the potential impact to customers. Question: What would you include in a best practices set of TOS topics? Weslow: Following is an overview of topics that should be considered for all TOS:
  • The scope of the site usage license
  • Appropriate and inappropriate uses of the site
  • Access restrictions including age limitations
  • Intellectual property policies and complaint processing protocols
  • Rules for user generated content and comments
  • Data collection and privacy policies
  • A limitation of liability for site errors, down time, or technical problems

I want to thank David for answering these questions about TOS and how they relate to SMB organizations and their online Internet web presence.

Sample and template TOSs

Many organizations have legal teams that are tasked with drafting and maintaining the TOS for their websites; however, for SMBs, it is not always feasible or economical to spend a lot of resources on your TOS statements and agreements. There are several resources for creating generic TOSs, and I've included them in this short list below.

  • Free website terms and conditions - Provided by Free Net Law includes free legal notices such as "Privacy Statement", Website Terms and Conditions", "Website Disclaimer", Copyright Notice", "Cookies Policy", and others which are provided in .doc document form for download.
  • Privacy Policy / Terms of Service Generator - Provided by Ben Nadel, the generator requires just a company name and state that the company is located to generate the TOS agreement.
  • Website Standard Terms and Conditions Template - Provided by Entrepreneur is a downloadable PDF document which includes a privacy statement, confidentiality, disclaimer, payment, cancellation policy, and others.

It is a good rule of thumb to have a set of TOS agreements and/or statements available on your website, but it also becomes a delicate balance between protecting your organization and not offending your user base. Finding the right sense of balance is essential to keeping both your company in business and keeping your customers happy.

About

Ryan has performed in a broad range of technology support roles for electric-generation utilities, including nuclear power plants, and for the telecommunications industry. He has worked in web development for the restaurant industry and the Federal g...

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