Designing Terms of Use and Privacy Policies in the Internet Age

As more and more of our world moves online, and more and more businesses establish an online presence or platform, it has become essential for every company with an online presence to protect itself from claims by users of its website.  For example, the number of claims by users related to alleged misuse of their personal data obtained online rises year after year.

Companies primarily protect themselves through their terms of use and privacy policies, which, if properly executed, act as a contract between the company and the user.  One issue companies face is whether to have their terms of use and privacy policies be “click through,” meaning the user must take a physical action such as clicking a box to agree to the terms before proceeding to the platform, or “browserwrap,” meaning the user “silently” agrees to the terms by simply using the platform.  Companies are attracted to browserwrap policies because of their convenience in allowing users immediate access to the platform, but do they create an enforceable agreement between the platform and the user?

To answer this question, companies must understand the Uniform Electronic Transactions Act (“UETA”), 15 U.S.C. § 7001 et seq., which is a federal statute that, among other things and along with any relevant state laws, governs interactions between platforms and the users of those platforms.  UETA provides that a user’s assent to an electronic contract can be manifested by an electronic signature, which courts have interpreted to include the clicking or checking of a box.  UETA also provides that it is the law in states that do not adopt their own versions of the act.  As of the time this was written, 47 states had adopted UETA.  These various state versions are not identical, but courts applying them have uniformly held that if a user manifests his intent to agree to terms of use and privacy policies by actively clicking a box, a valid, enforceable contract is created the moment that box is clicked, even if the user fails to read the terms.  In this way, courts treat terms implemented by click through just as they would any other contract, meaning that a party who fails to read it before signing (or clicking) generally does so at his own peril.

Jurisdictions are conflicted, however, as to whether browserwrap terms of use and privacy policies are enforceable because, in the browserwrap scenario, the user does not actively manifest his intent to agree to the terms.  Thus, before a company decides which form to use to implement its terms, it must carefully consider which approach a court it could find itself in might take and weigh the risk that might accompany any uncertainty.

If you have concerns about ensuring that your company’s terms of use and privacy policy are enforceable or otherwise provide adequate protection, please contact us for more information.

             Author: W. Carlos Spaht              Practice Area: Technology Law              Date: September 15, 2014

Disclaimer: The information provided herein (1) is for general information only; (2) does not create an attorney-client relationship between the author or the author’s firm and the reader; (3) does not constitute the provision of legal advice, tax advice, or professional consulting of any kind; and (4) does not substitute for consultation with professional legal, tax or other competent advisors. Before making any decision or taking any action in connection with the matters discussed herein, you should consult with a professional legal, tax and/or other advisor who should be provided with all pertinent facts relevant to your particular situation. The information provided herein is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information.