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What is a Terms of Service and Do I Need One?

What does Terms of Service Mean?

According to Techopedia, “Terms of service (ToS) is a commonly used phrase for the set of rules and regulations a provider attaches to a software service or Web-delivered product. These kinds of agreements are so common in the digital world that most consumers understand the use of a terms-of-service agreement and must often agree to it before utilizing the software service.”

You may also see ToS referred to as Terms of Use (ToU).

Basically, ToS is a document or web page that explains the conditions that a person agrees to be bound by in order to use your service.

Who Needs a Terms of Service?

If you provide any kind of service to your customers then you should have a ToS. If customers are paying you for anything, goods or services, you should have a ToS.

How Does a ToS Help?

Have you ever had a customer request a refund 6 months after they purchased something and you were unsure what to do? If you have a ToS, this situation would be covered, and you can point them to it.

It’s also a great idea to include a checkbox on all orders that states the customer agree to be bound by the terms of service. By having them check the box before they submit their order it is proof that they knew what they were agreeing to.

Is a Terms of Service Required?

There is no requirement that you have a ToS. However, it is highly recommended as it can help in certain legal situations, and it is the place where customers can see your policies in relation to the goods and services you sell.

What Should Your Terms of Service Contain?

Your ToS needs to contain everything your customers need to know about using or purchasing your goods or services. This may include, but it not limited to:

  • Accounts on your site – if customers can create accounts on your site, what rules must they abide by? Such as keeping their login information secure, how old they must be, etc
  • Making purchases – what must they give you in order to make a purchase, and do they have the right to use that information, etc
  • Cancellations – what is your cancellation policy
  • Warranties – what is your warranty policy
  • Subscriptions – do you offer subscriptions and what are the rules for it
  • Avail ability, errors, and inaccuracies – a statement about not assuming liability if things are not available, if there are errors or inaccuracies
  • Links to third-party sites – does your site have links to third-party sites, and what responsibility you take for them
  • Intellectual property – who owns the intellectual property on your site, who they can contact if they find your information on another site, and who they can contact if they think the information on your site is infringing on others intellectual property rights
  • Damages – a statement that you are not liable if things are not working or go wrong
  • Governing law, severability, dispute resolutions, and venue – where will al court cases regarding your business take place
  • Changes – when and how often do you update the ToS
  • Questions – who can people contact about your ToS

How to Create a Terms of Service

Hopefully, you can see how important a ToS is for your business by now. So how do you go about creating one?

You can do it yourself. There are ToS generators on the web. A simple search will turn a few of them up. This is a great and cheap solution. However, it means you need to check back and re-update it on a regular basis, as things in your business change.

You can hire a lawyer. First, you would need to find a lawyer specializing in business law, and that understands, and keeps up to date on changes as they happen. This is an excellent option, but also a costly option. An initial ToS would be $500 plus. Reviews would be cheaper, but they may be needed a few times a year.

Pay for a Service. Probably the easiest solution of the three. I personally use a service called Termageddon. Strange name, huh? They are a company that stays up to date on privacy acts and regulations, and has designed customizable Terms of Service that will auto-update based on changing regulations. That means you input your company information one time, answer some questions, and then you have a ToS created for you that is stored on their site. You add a little bit of code to your site, and your ToS automatically updates anytime there is a change in regulations.

Create Your Terms of Service Now

No matter which option you choose, choose one of them. Having a Terms of Service is a must for any business that sells goods or services online. At a minimum it will help limit your liability in certain situations. It will also give your customers an understanding of what they can and can’t do. It also gives you an easy place to point people when they complain about not getting a refund three months after they purchased something from you, when your policy states 30 days.

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