Importance of a Terms of Use and Privacy Policy

by | Feb 28, 2023 | eCommerce

Privacy Policy and TOU

If you’re wondering if your business needs to post terms of use and privacy policy on your website, the answer is a resounding “yes.” Below demonstrates the importance of a terms of service (TOU) and privacy policy for your business website.

  • The Law (might) Require It

First, in recent years the European Union began enforcing its General Data Protection Regulation (GDPR), which protects website visitors from unknowingly having their personal data gathered for website business use. In addition, some states, including California, Virginia,  and Colorado, have passed or are passing their versions of strict regulations to protect consumer data. These regulations affect all businesses, including those not used for ecommerce. Accordingly, it is more important than ever for companies to be clear about what kind of data they are gathering from their visitors and how that data will be used.

  • Avoiding Lawsuits

Especially with laws changing rapidly, your business could be at risk. Over ten states have active privacy law legislation, and more states are joining the efforts to set rules for collecting residents’ data.

Not having a terms of use and privacy policy in place could put your company at risk of being sued because there is no explanation of how any data received from web viewers will (or will not be used). Although each state’s law is different, the majority require companies to provide clear information on what’s collected, why it’s collected, and who receives the data. Accordingly, integrated terms of use and privacy policy should inform your website visitors, how their personal information will be gathered and used. For example, does your website use cookies? Or, do you have a signup page that collects valuable information such as names and email addresses so you can market to visitors as potential prospects?

Your policy should include information on how your data is stored, including how long the information is kept and who inside your organization can access the website user’s data. In addition, you should require your customers to agree to all website policies. Typically, this is done by stating, “By clicking subscribe, you agree to our TOU and Privacy Policy.” with both policies linked or requiring customers to click a box agreeing to the TOU and privacy policy.

  • Establishing Trust With Website Visitors

Clear TOU and privacy policies give clear, non-legalese information about your website and data usage. The policies demonstrate legitimacy and establish trust with the customers. Every customer knows their data is collected, but companies that provide background on why they collect the data and the benefits to the customer of sharing their data (ex, purchase suggestions based on website browsing) are able to put the customer at ease about their data. Trust is one of the most significant assets your business can develop with your customers because those you’ve established trust with will become returning customers and be more likely to recommend your business or service to friends, family, and coworkers.

  •  Use Third Party Services.

Many companies, including Google AdWords and Analytics, require users of their services to have a privacy policy on their websites. Some companies even require users of their services to update their privacy policy to disclose the user is using the services to their customers. This is how third parties minimize their liability due to collecting or buying the data you receive. However, this also means if an issue comes up, you may have increased liability due to the fact you did not update your site to include a privacy policy and meet the other requirements of the third-party contract.

  • Layout Intentions and Understanding.

In addition, TOUs and privacy policies allow you a chance to inform customers clearly about how your goods or services are provided. For example, the TOU gives companies the opportunity to give information on the shipping of products, what happens if a credit card is declined, or return procedures. For the customer to be required to follow your procedures, you must enter into a contract. Merely having the information somewhere on your website might not be seen by the courts as a contract. In contrast, a TOU and privacy policy are clear contracts that customers are trained to look out for to find information about the goods/service terms.

An experienced firm such as EmergeCounsel can help ensure you’re compliant with the changing laws across the United States and not putting your business at risk of a lawsuit.

Contact our experienced team for assistance with your terms of service, privacy policy, or any IP needs today!


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