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A beginner’s guide to understanding terms, conditions and privacy policies

Posted by Shivali Anand

November 16, 2021    |     5-minute read (936 words)

When launching a website, mobile app or online service, establishing a privacy policy and terms and conditions are essential. Because they serve different purposes, with the privacy policy protecting users and terms and conditions protecting your business and limiting liability, you must keep these agreements separate.

The agreements should also be concise, clear and written in simple English to the extent possible so users can easily understand, and remember the information. To properly create these legal documents, entrepreneurs must first understand why they are required, as well as what they should contain.

Why is a privacy policy necessary?

Entrepreneurs use privacy policies to tell customers about how their personal information is collected, stored, shared and used. Your users' names, addresses, email addresses, phone numbers, IP addresses, dates of birth, credit card information, license numbers and insurance information are examples of personal information. 

Here are reasons you need a privacy policy agreement:

  • Legal requirement – If you collect and process personal data from customers, then you must have a privacy policy. If you wish to change your privacy practices, inform users in advance so they can make educated decisions about whether to use your products or services.
  • Informing users – The privacy policy alerts users why you gather their personal information, what you do with it, how you safeguard it and where it is stored. The agreement also tells users what kind of data you'll gather and whether you'll share it with others. Every policy may have different reasons for collecting information from users, such as recordkeeping, delivering items or providing updates about new products or services.
  • Compliance – Depending on your business location, your privacy policy agreement must comply with corresponding international laws. Companies that deal in financial goods and services and sensitive data should also take precautions to protect their clients' personal information.
  • Foster trust – A privacy policy agreement demonstrates to site or app users that they can trust you with their data, and that it will be handled with care. This can help you earn users' confidence and inspire commitment. Even if you don't collect data, you still need a privacy policy to assure consumers they can feel safe when using your services.
What should a privacy policy contain?

To decide how they can lawfully handle users' sensitive information, site or app owners must evaluate federal, state and local regulations. Because local and state laws may differ, it's wise to seek legal advice before sharing or disposing of consumer information. 

The following elements are commonly address in privacy policies:

  1. Data collection: Describe how you'll gather data and how you'll use it on your site.

  2. Data security: Describe the steps you'll take to keep customers' personal information safe and secure.

  3. Personal information: Describe the sorts of personal information collected and processed by your site to identify users.

  4. Cookies: Describe how cookies are used on your site.

  5. Data privacy rights: Inform users of their data privacy rights.

  6. Nonpersonal information: Mention nonpersonal information that you collect about your users, such as their zip codes, the pages they visit on your site and the web browsers/devices they use to view your site, in the privacy policy.
What is the purpose of a terms and conditions agreement?

The terms and conditions agreement is a legal document that lays out the rules, restrictions and criteria that your users must follow when using your site, app or service. The agreement also functions as a contract between service providers and their customers or users.

A T&C agreement, also known as a service level agreement, is an agreement between a service provider and a service user on a few characteristics of the services, such as quality, responsibilities, and availability. Due to the following reasons, you must have a T&C agreement:

  • Defends your business against legal claims – A T&C agreement protects your organization from possible legal claims made by visitors to your site or users of your mobile app, therefore reducing your legal exposure.
  • Required by law – A T&C agreement is a legal requirement, so you should make it available to consumers via your site or app.
  • Enforce appropriate use – The T&C agreement informs users what is expected of them when using your site. If you want to make any changes to your T&C agreement, make sure to alert users ahead of time.
  • Establish credibility – A T&C agreement helps establish credibility and trust with users.
What should a terms and conditions agreement contain?

It's critical to post your T&C agreement on the company's site if you're doing business online. Entrepreneurs may wish to seek legal help when creating the terms of service.

Some things you must mention in your T&C agreement:

  1. Governing law clause: Include the governing laws of the nation and state where you operate.

  2. User rights and responsibilities: Include the rules governing the use of your site, such as refund policies, billing and subscription policies, minimum age restrictions, order cancellation policies and applicable warranties.

  3. Confidentiality paragraph: This clause indicates that any information gathered through the site will not be shared with third parties unless specifically authorized.

  4. Security: Describe the types of security measures in place on your site.

  5. Termination clause: This defines the terms under which an agreement between a service provider and user can be terminated.

  6. Copyright notice: A copyright notice must be included to protect your intellectual property, such logo, custom web or mobile app design, and your entire site’s content. 

  7. Disclaimer notice: This describes what will happen if a user violates your rules and guidelines or misuses your site or mobile app.

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