The Importance of Privacy Policies and Terms of Service Agreements
Privacy policy and terms of service documents are an essential part of most websites and mobile applications. Understanding what they are and why they matter is essential for business owners. The Terms of Use (or Terms of Service) are the agreement between you and your users about the usage of your services and are typically very friendly to the website owner. However, the privacy policy is your promise to your users about what you will do with the information they submit through your services. The Privacy Policy can be key in proving that a company has potential customers’ best interests in mind. In addition, your Terms and Privacy Policy will affect how search engines will rank your site. Google considers this content to be essential in order to rank businesses in searches for services online.
What Is A Privacy Policy?
In one way or another, all websites interact with their users and gather information about them. Websites that collect this information are responsible for not only protecting it but also letting customers know how it's being used. Privacy policies serve this vital purpose.
By posting a privacy policy, your business explains to visitors how your website gathers, processes, stores, and shares user data. It should also typically include the reasons that your business gathers the information and the rights of users concerning the information collected.
Although no single federal law in the United States governs privacy policies, Europe's General Data Protection Regulation (GDPR) requires the use of privacy policies, as do the laws of several states in the United States. As a result, in today's interconnected global economy, a well-drafted privacy policy is essential for businesses of all sizes and types.
What Should A Well-Drafted Privacy Policy Include?
All websites collect data about their users. A well-drafted privacy policy should inform users about the data that is being gathered. Types of personal data collected may include but are not limited to:
Name
Email address
IP address
Payment details
Session activity
And more
In addition to informing users about the type of data being collected, a privacy policy should also include these key components:
An explanation of the kind of information that the website collects and how it is collected: Some data is collected through the completion of online forms. In other instances, it is collected by using a cell phone location or IP address.
The reason the website is collecting data: Sometimes, the data is collected to track sales statistics. In others, it is used for marketing. Data may also be collected to improve the customer experience. Any reasons that a website collects and uses data should always be disclosed in the privacy policy.
What the business plans to do with the data: A privacy policy should always disclose how the data is used, stored, and protected from security threats. In some cases, companies also sell data to third parties for various purposes. This needs to be disclosed as well.
An opt-out policy: Some states have laws that require the option to delete data that companies have collected from them and to "opt-out" of the sale of their personal information. The privacy policy should include details on how users can do so.
While a privacy policy is a critical component of a website's legal compliance, it isn't the only component. A clear and thorough terms of service agreement is also necessary. These two documents and policies together are essential for business operations no matter how large or small your company is.
What Else Should a Terms of Service Agreement Include?
A terms of service agreement is an agreement between someone who provides a service and someone who wants to use that service. A terms of service agreement serves several purposes, including:
Limiting liability of the website owner and its third-party vendors
Ensuring compliance with applicable laws
Protecting intellectual property rights
And more
In addition to the privacy policy, a well-drafted terms of service agreement should also include:
A liability section: This portion of the agreement typically notifies users of certain situations in which the website may or may not have liability. This part of the policy should make it clear to users that it is legally binding and that they accept the terms of liability when they accept the terms of service agreement and use the website.
A section concerning applicable laws and regulations: This section notifies users of laws that may apply to the use of the website, the type of information collected, and how the website complies with those laws. This section may also address how potential legal disputes arising from website use will be handled.
Depending upon the type of website, a terms of service agreement might also include other important components. If you are not sure about what details need to be included in your terms of service agreement, getting some legal support would be beneficial. There are legal experts who specialize in these kinds of questions and can help you draft the right service agreement for your needs.
Why do They Matter?
As a business owner, including a clear privacy policy and thorough terms of service agreement is important for a number of reasons, including:
Protecting your legal rights as a business owner and reducing your risk of liability with regard to how you use, store, and collect information from others.
Having clear and effective terms of service and privacy policies also shows those who visit your website that your business takes privacy seriously. Most people want to know that their personal information will be treated with care and that their rights are valued. A sound privacy policy and clear terms of service agreement serve that important purpose.
Reducing the risk of significant fines or other legal consequences that your business would incur if it were not compliant with the law.
As with any legal matter, drafting an effective terms of service agreement and privacy policy can be complicated – but it doesn't have to be. Consulting a knowledgeable and experienced attorney who understands the law and can assist you with this process is always strongly advised.