Terms of Service Matter for Your Business

Recently, the video conference provider Zoom experienced significant backlash when it updated its online terms of service (ToS). ToS updates are not uncommon, however this one, which gave Zoom the right to use customer content in a number of ways — including in the training of its AI models — caused quite a stir. National news shows picked up the story and customers threatened termination of their Zoom accounts. 

Zoom quickly realized the horrible position it had put itself in. Its President admitted the situation amounted to a “process failure,” and the company’s terms of service were changed to satisfy concerns. 

Look Before You Click

In today’s digital age, social media applications (LinkedIn, Instagram, etc.), communication tools (Zoom, GoToMeeting, Skype, etc.), and data analytic platforms (Google, CDW, Drift, etc.) have become essential for numerous business functions (not to mention for living a modern, connected life).

Each of these services has its own ToS. When the subscription fee is low (or nonexistent), it’s easy to just click the “Agree” button and dive in. 

However, these terms of service play a vital role in outlining the rules, rights, and responsibilities that govern a company’s ongoing use of the platform. And while these ToS are often non-negotiable (even for larger enterprises with significant leverage), certain aspects demand business scrutiny — especially when working with services that collect, process, or store important data, such as proprietary data, customer data, or personal data (or all of the above).

Today’s newsletter looks at five key areas of online terms of service and their associated risks and provides strategies for navigating these challenges.

Terms of Service — Key Risks

#1. User Data and Privacy

Terms of Service dictate how the platform handles user data. They define what data the platform collects, how it is used and stored, and whether it is shared with third parties. 

Harmful terms might give the vendor control of your business’s data and content, including personal information. This increases the risk of unauthorized disclosures. Depending on the specifics, you may have a unique obligation to an employee, customer, or other third party that could be violated (or breached) by using the vendor’s platform.

#2. Content Ownership and Usage

The ToS specify who owns the data and other content processed by the vendor. Beware of platforms that claim broad rights to your content, potentially allowing the platform to use, modify, and distribute that content without your consent. 

For example, if a vendor is assisting with marketing initiatives, do the vendor’s terms of service transfer ownership of any materials created? Is your business free to use the content on another platform? Can the vendor use the content with another customer? 

In these and other situations, your content could be exploited for commercial purposes without due compensation and credit.

#3. Dispute Resolution

Many ToS include clauses that require users to settle disputes through arbitration rather than through the court system. While arbitration is intended to save time and money, it can limit your ability to take legal action against the platform for important issues, such as privacy breaches or unfair/deceptive trade practices.

#4. Modifications to Terms

Often, platforms reserve the right to change the ToS unilaterally, as was the case with Zoom. These modifications could affect your business’s benefits and liabilities without your input (or even knowledge).

At a minimum, the ToS should provide advance notice and an opportunity to review any changes before they go into effect.

#5. Limitation of Liability

Some terms of service limit the vendor’s liability for any harm or damages caused — even if the vendor’s actions are negligent or intentional! This limitation can leave users without meaningful recourse in the face of platform errors, data breaches, or other issues.

Consider Meta’s (Facebook) limitation of liability which includes the following: “Our aggregate liability arising out of or relating to these Terms or the Meta Products will not exceed the greater of $100 or the amount you have paid us in the past twelve months.”

Navigating the Challenge

If you find certain terms unacceptable, consider the following options:

Review and Understand. Carefully read and comprehend the ToS before agreeing. Highlight concerning sections and seek clarification from the vendor’s support team if needed. These steps may provide necessary comfort — or at least an understanding of the potential risks. Also, set up a process for reviewing ToS updates when notified by the vendor.

Modify Privacy Settings. Take advantage of any support that might be offered to customize the settings for your business and use the platform’s privacy settings to control the visibility of your information and content. For example, most social media platforms allow users to adjust who can see your personal information and content and whether users are identified in pictures.

Negotiate or Opt Out. Some vendors might allow limited negotiation or opting out of certain terms. Reach out to the vendor’s customer support to explore these options.

Explore Alternatives. If your business remains uncomfortable with a vendor’s terms, consider using alternative platforms that offer more favorable terms and conditions.

Seek Legal Advice. If the terms seem particularly complex or risky, consider seeking legal advice before agreeing.

Proceed with Caution

These days, terms of service are everywhere. The points above highlight how they can result in legal actions, user backlash, and increased risk for your business. And while the ToS are often lengthy and filled with legalese, they define your rights and responsibilities as a user, as well as a vendor’s obligations.

Approach the ToS with caution, consider how problematic terms may impact your operations, and don’t hesitate to take steps to protect your rights.