How to Write Terms of Use and Privacy Policies that Work for your Website

How to Write Terms of Use and Privacy Policies that Work for your Website

Mar 3 2016

A version of this article can be found in Quickbook's Small Business Centre: The Ultimate Guide to Running Your Small Business here.

It’s not a coincidence that nearly every website has a link in its footer to the “Terms of Use” and “Privacy Policy”. We all know that few people actually click these links, so do they really matter? And does anyone take the time to write these things from scratch, or do they just copy them from another website?

In this article, we summarize the importance of a well-drafted Terms of Use and Privacy Policy for web-based businesses. We also provide some tips on how to customize each document for your business to ensure your interests are covered.

What are Terms of Use?

Terms of Use explain to users the rules and procedures for accessing and using your website, including the terms of sale for any goods or services you sell. Essentially, the Terms of Use are a contract between you and the people using your website. If they don’t agree to abide by the Terms of Use, you do not want to be doing business with them and they should not be using your website.

For example, if you sell products online, the Terms of Use will cover items like how payment is processed, shipping conditions, return policy, product availability, ownership of intellectual property (trademarks and copyrights), and other items that are specific to your business.

Things can get more complicated depending on the different uses of your website. If your website is an online application, software program or, like us at Law Scout, an online marketplace, there will be additional elements to ensure your Terms of Use are complete.

What is a Privacy Policy?

A privacy policy informs users about how you collect, protect and use personal information through your website. Online privacy is a carefully regulated issue with potentially steep fines for violations. Most small businesses cannot afford to go offside on privacy regulations, so it’s especially important to have a clear and legally-compliant privacy policy for your website.

When you collect information about your users, you have strict legal obligations to do so carefully and with their consent. A good privacy policy balances a business’s commercial need for information with the user’s right to privacy. Overall, you should disclose the types of information you collect, the reason why you collect it, whether or not you disclose information to third- parties, and how a user can go about having their information deleted from your servers in the future. By disclosing this information, your users can make an informed decision as to whether they want to use your services and provide their personal information in the first place.

In Canada, privacy regulations can be slightly different in each province, but the Personal Information Protection and Electronic Documents Act (PIPEDA) is a federal law that is binding in most provinces. In Quebec, Alberta and British Columbia, there are provincial acts that are substantially similar to PIPEDA that govern privacy. In Ontario, New Brunswick and Newfoundland and Labrador, there are provincial acts which apply to health information. If your business has an online presence, you should gain some familiarity with the appropriate privacy laws to make sure you are conducting business in compliance.

So what does this all mean for your Business?

You might be tempted to just copy the Terms of Use and Privacy Policy from a similar website and add them to your own website. This could save you the time and stress of creating your own. But that would be both unfair to your users and highly risky from a legal perspective.

It’s important for your Terms of Use and Privacy Policy to reflect the manner in which you actually run your business and collect information. It’s not helpful, and also potentially dangerous, if your business operates in a manner that is different than what it says in your Terms of Use and Privacy Policy.

It’s also important to remember that Terms of Use and Privacy Policies are both “living documents”. No matter how careful you are when you initially write them, these documents need to be constantly updated and revised to accurately reflect the way your business operates. Whenever you make a change in your business operations, you should be asking yourself whether that requires an update or clarification to your existing website documents.

What to consider when drafting your Terms of Use and Privacy Policy?

  1. Users. How will a user actually interact with your website? Will there be more than one type of user? Does your website allow businesses to conduct transactions online (i.e. service providers and consumers)?
  2. Age of Users. Will your website be advertised to or potentially used by individuals under the age of 18? If so, there are extremely strict guidelines on the type of information you can collect.
  3. Information Gathered. What type of private information will be gathered by your website (i.e. financial information, medical information, personal identifying information)?
  4. Jurisdiction and Dispute Resolution. Where is your business located? Where do parties go if they have a dispute? How will disputes be resolved and what laws will apply?
  5. Third Party Apps. Are there third party applications that are integrated into your website (i.e. Google Apps, Twitter, Zapier, etc.)? Is personal information gathered from your users being provided to these third party applications?
  6. Secure Collection and Storage of Private Information. How are you collecting and storing personal private information?
  7. User-Generated Content. Are users allowed to post their own content to your website? What is your policy for offensive material?

It’s true that your Terms of Use and Privacy Policy will have certain standard terms. That’s not the hard part. What’s most important is that your Terms of Use and Privacy Policy are customized so that they match the uniqueness of your business - to reflect the way you actually operate and store user’s information. Once your Terms of Use and Privacy Policy are in place, you will only need to update them periodically to reflect changes in your business. Overall, you can take comfort in knowing your website is operating in compliance with applicable laws and focus your attention on growing your business.

At Law Scout, you can get tailored Website Terms of Use and Privacy Policies prepared by pre-vetted business lawyers at upfront, transparent prices. Click here to learn more. If you have questions along the way, send us an email at [email protected] and we'd be happy to help you.