Doing Business Online? You Probably Need a Privacy Policy and Terms of Service
July 29, 2021 – Articles
The COVID-19 pandemic has shown that every business—even traditional brick and mortar businesses—needs a presence on the internet. When people think of online commerce, they usually think about making purchases on Amazon. However, as contactless purchasing becomes more prevalent, restaurants, breweries, and distilleries are increasingly developing online options for their consumers. Now, consumers can either download a mobile application or scan a QR code to read a menu or place an order. As purchases and menus transition online, businesses need to ensure they have the requisite disclosures and terms set out to govern these online interactions. This article will review the importance of online privacy policies and terms of service when interacting with consumers online.
The Importance of Privacy Policies and Terms of Service
Whether a business operates 100% online or integrates online services into its in-person transactions, businesses need to make two critical documents available to consumers: (1) a privacy policy; and (2) terms of service.
A privacy policy is a public notice or statement that discloses how a business will collect, use, and share a consumer’s personal data. Privacy policies are important because various U.S. and international privacy laws require such disclosures. One of the more notable domestic privacy laws requiring the publishing of a privacy policy is the California Online Privacy Protection Act (CalOPPA). CalOPPA was a groundbreaking law in 2003 which required businesses operating a commercial website collecting personal data to conspicuously post and comply with a privacy policy. A decade-and-a-half later, California led the way again by passing the California Consumer Privacy Act (CCPA). The CCPA not only reinforced the importance of online privacy policies, but also expanded privacy protections for California residents, including creating various consumer privacy rights. Since the CCPA was passed in 2018, the U.S. privacy landscape has continued to develop with the adoption of amendments to CCPA and passage of new state consumer privacy laws by Virginia and Colorado similar to the CCPA. Over the next few years, mores states will pass consumer privacy laws, with each new law likely to contain privacy policy requirements.
In contrast, terms of service (Terms) are a legally binding agreement between a business and a consumer setting out terms for using a website or mobile application (collectively, the Services). It’s important to reiterate the Terms are legally binding contracts setting out key requirements both the business and the consumer must abide by. The Terms generally set out the rules consumers must follow while interacting with the Services, including to what extent a consumer can use the Services and what conduct and activities are prohibited through the Services. Most importantly, the Terms generally contain disclaimers and limitations of liability to protect the business. For example, the Terms will limit who can use the Services (e.g., anyone under 18 years of age) and disclaim various express and/or implied warranties such as a consumer’s error-free use of the Services, the accuracy of information on the Services, or the availability of any products on the Services.
Recommendations
As restaurants, breweries, and distilleries expand their offerings on the Internet and integrate websites and mobile applications into their business offerings, it’s more important than ever for businesses to prepare and publish both a privacy policy and terms of service. Terms of service are imperative for a business to protect its intellectual property (e.g., its website and/or mobile application) and limit liability to the fullest extent possible, while a privacy policy will demonstrate to consumers a business’ commitment to privacy. These disclosures are also increasingly becoming a legal mandate.
Dinsmore & Shohl has an extensive team of intellectual property, privacy, and corporate attorneys with experience preparing tailored privacy policies and terms of service for businesses across various industries. For assistance, please contact your Dinsmore & Shohl LLP attorney.