Do The Research On Your Terms Of Use: They Might Just Be Illegal

I’ve got to be honest here: these business articles are a dime a dozen. They spout out the general knowledge of the importance of the training manual, service policies and especially a “terms of use agreement,” and while those concepts of business are crucial to the success of any company, we often forget the one important requirement necessary to drafting all those documents

Is it being done right? By “right,” of course, I mean legal. Yes, there is a right way to do it, and a wrong way to do it; believe it or not, it’s really easy getting it wrong the first time, especially with the advent of the Internet still in full force mode, growing even bigger than it already is, amazingly enough.

It Can’t Be That Hard, Can It?

Oh, yes, it can. We can easily do the research online and find cookie-cutter terms of use agreements, which is why we’re often lulled into that false sense of security.

How ironic, don’t you think? The ever-changing social media and cyberspace landscape does a huge number on the legal industry in terms of changing laws that we can’t keep up with, and yet the very fact that we do research online for something as simple as a terms of use agreement can be the biggest mistake of our corporate lives.

Let this be the first lesson: if you do your business online, really pay attention to how you’re doing your business.

There Are Two Concepts to Watch Out For: “Browsewrap” and “Click-Through”

If you’re a major guru online and you don’t know these terms, you’re not a guru at all, at least in the realm of business law or knowledge. For starters, a “browserwrap” agreement is very like one of those generic signs at the entrance of an airport stating that you consent to searches. Once you enter, you offer that right to airport officials, basically.

The “browserwrap” does the same thing. Once you enter that website, as long as you’re surfing through the pages, you implicitly consent to whatever terms are listed on that agreement — no ifs, ands or buts. Usually you’d find such terms linked right at the bottom of the homepage and all over the website collectively.

Here’s the truth, though, about this type of terms of use agreement you could potentially use for your online business — don’t rely on them. They may work for an airport, but for your business, it’s not like someone can pull in a suitcase full of explosives to blow up your business from the inside of cyberspace. There are only a handful of cases at best reviewing the enforceability of these browsewrap agreements.

What you need to do instead is simply utilize such an agreement as an “informational” notice. In other words, you can’t have the browserwrap agreement without….

The click-through agreement.

This is the real gatekeeper in cyberspace for any business. They’re actually quite common for e-commerce websites, taking on all kinds of forms. Their purposes, though, remain the same.

That final “agreement” a web surfer must take is to conform to all your rules before reaching further into your website. A way of looking at this kind of agreement is when you go to the back of a night club and get asked the password to get in. If you know the password, you get in. If not, you don’t.

In this case, though, all you have to do as a customer or guest to the website is “consent” to certain terms before you’re allowed to “click through” on the page and enter more pages, probably with services or products available for purchase or use.

Honestly, the Latter Here — the Click-Through — Is the Most Effective in Court

You’ll find that no matter what complaint a customer may pass on you, legally that click-through agreement is enough for a court to favor you, because you are legally and comprehensively giving that customer complete notice before the customer ever enters your domain. It’s fair warning.

You do, however, need to make sure your click-through agreement complies with the applicable law pertaining to your business or industry. Again, this adage in law is crucial. If the language isn’t clear or relevant, it won’t hold up in court. Do your research.

This Also Depends on What Kind of Online Customers You Have

There are three types of customers you have to watch out for when maintaining an online business —

  • Passive Visitors
  • Active Visitors
  • Purchasers

Tailoring your business — as well as facets of your business — directly relate to how you treat these three types of customers. Allow me to parallel that with a retail store, though: passive visitors are very much “window shoppers” whereas active visitors are perusing through specific departments constantly looking at merchandise (with products already in their shopping basket or cart) while purchasers follow protocol and guidelines to wait in line for the point of sale.

Take a good look at that scenario: there are rules there, just like everywhere else. We take it all for granted, because we’re so used to it. Passive visitors have the rule of being able to simply “walk around” without causing commotion, no running, no horseplay, no damaging merchandise, etc. etc., whereas the “active visitor” may have rules as to how many items to bring into the fitting room or walking out of the store with merchandise in hand before paying, or leaving carts unattended. Still further there’s the regulations imposed on the point of sale, as in how many items a person can have in the cart to purchase at any given time, how long the lines must be and to immediately move to a new open line to liquidate colossal traffic jams.

Everywhere we go, there are rules — the same applies to an online store.

Where Browsewrap Agreements Matter

Typically, this agreement effectively works with the passive visitor, the window shopper. Perhaps you have a landing page, sort of like a squeeze page, where some visitors can casually explore without really interested in buying anything.

Having that browsewrap agreement is just enough to inform such a customer of the rights and obligations mandatory to any “window shopper.”

You Then Have the “Active Visitors” and “Purchasers” Requiring That Click-Through

Oftentimes the passive visitor becomes active, and then you have the situation of getting all necessary legal information from that customer, because that customer’s going to buy something now.

That customer needs that all-important privacy policy. In a way, that can be considered the sales associate in the department hearing the fateful words: “I’m all set with my purchase.” The natural “privacy” policy, in this case, is to make sure to bring your purchases up to the point-of-sale registers for proper processing before the store closes. In fact, many stores even announce that on an intercom when the time gets a little close to closing.

It’s that click-through agreement sealing the deal, often with a username and password for that extra protection. This is important, though: you have to make sure your “privacy policy,” whatever it may be, will conform to whatever state law applies to you.

Additionally, collecting information with your policy from children does carry with it certain guidelines that you absolutely need to be aware of. This is why while that privacy policy, possibly coupled with a click-through agreement, can often be a browsewrap format, as long as you ensure that every active visitor can easily check every part of your policy right off the bat.

The click-through agreement then shows up. Why? Because now that customer has reached the point-of-sale line, so to speak. Your online customer’s basically reading the entire agreement, and before that customer can even make any purchase with a credit card or PayPal account, that customer must click a button stating that he or she “agrees to all the terms written.”

This will protect you in court should any dispute arise.

It’s a Major Process

Being online doesn’t have the same routine as a regular Macy’s or JCPenny, obviously. That’s why this has to be laid out, preferably by an experienced business lawyer. You see the comparisons. The reality is it’s no different. You can be online or in person; no matter what, there are rules to follow on both sides.

If they’re not followed, court consequences may follow. And that’s no fun for anyone.

Matt Faustman is the CEO at UpCounsel. You can follow his business insights on Twitter at @upcounsel.