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E-Commerce Means Needing a Terms of Service Agreement for Your Website

If you are running a San Diego business, you need a Terms of Service, sometimes called a Terms of Use, Agreement for your website. This is essential for two broad reasons – controlling how users access and use your information, logos, photos etc., and maintaining compliance with various laws with respect to consent to collect, use, and manipulate information from the consumer. In the US, the Terms of Service (“TOS”) agreements are contracts and they are valid and enforceable in California even if the website user does not actually read the TOS agreement. Generally, there are three methods for a user to “agree” to the TOS agreement:

  • Continued use of the website — implicit agreement,
  • Clicking on an “agree” button, or
  • Being required to type in their name in a field provided for the purpose of stating that they have read and agreed to the TOS agreement.

You need an experienced and proven corporate and internet lawyer to help draft an effective TOS agreement. Here is some quick information on TOS agreements.

San Diego Internet and Corporate Law: Protecting Your Business and Property

Many companies have a website for e-commerce. Like face-to-face transactions, you need rules with respect to internet sales. As such, your site managers and sales staff will post photos, the site layout, your company logos, company copyright and product descriptions, etc. All of the content uploaded by your staff onto the website is proprietary and valuable to your business. Among other things, your TOS agreement must protect those proprietary assets from being unlawfully used by those accessing your site.

San Diego Internet and Corporate Law: Protection From Liability for Actions/Statements of Others

If your website allows for comments, likes, or any sort of feedback, your TOS agreement must also protect your company from liability for scandalous or offensive use or misuse of those features. In addition, at bare minimum, you must have the right and ability to remove such user-added content.

San Diego Internet and Corporate Law: With Respect to Sales

A website TOS agreement is often useful for setting down and getting agreement to many issues related to how sales are conducted. If you are running a simple sales site — let’s say t-shirts — even then, there are useful terms to set forth in the TOS agreements such as

  • Policies on returns, exchanges and refunds,
  • Shipping policies,
  • Warranties issues,
  • Dispute resolution and
  • Similar provisions.

When selling something more complex like machinery or electronics, other issues can be handled such as disclaimers or limitation of warranties, licensing rights (if any), method/timing of ownership transfer for insurance purposes, choice of law, and similar provisions.

San Diego Internet and Corporate Law: Compliance With Respect to Consent

The most common personal and financial data collected on websites is credit card and payment information. Your TOS agreement MUST have language whereby the user consents to provide such personal and financial information. In addition, your TOS agreement must state clearly whether your company stores the data, what use is made of the data, and with whom and under what conditions the data is shared. There is nothing particularly nefarious here. If you use a third-party vendor to verify the information, that is a “sharing” and a “processing” of the information. Both are needed to “complete the transaction” that the customer WANTS you to complete. But again, various laws and statutes require that you get consent from the customer to use the information even if only to “complete the transaction.”

Additionally, there are new rules going into effect in the EU requiring consents to be explicit. So, some pitfalls to avoid. Furthermore, your business is under pretty strict obligations to protect any data that you collect, transmit, or store from being stolen by internet hackers. You will need help from cybersecurity experts and your TOS agreement can help limit liability if there is a cyberattack event that compromises data. Loss of customer data can be very expensive — $439 million is now the estimated cost to Equifax for their massive data breach.

San Diego Internet and Corporate Law: Custom-Drafted TOS Agreement are Best

Your San Diego website and business have specific features that need protection. Do not settle for a boilerplate form TOS Agreement off the internet. Custom-drafted TOS agreements are worth the investment.

Contact San Diego Corporate Law

For more information, contact internet and corporate law attorney Michael Leonard, Esq. of San Diego Corporate Law by email or by calling (858) 483-9200. Mr. Leonard has the experience to help with any and all of your business legal needs.

You Might Also Like:

Express and Implied Warranties

The Importance of Written Contracts: Avoiding Vague and Uncertain Terms

Data Breaches and Data Protection for San Diego Businesses

Protect Your Business from Data Security Breaches

Why are Terms of Service Agreements Necessary for Running a Business?


Schedule a Consultation: 858.483.9200