October 30, 2012

How to Design your Terms of Service ex Zappos

How to design your Terms of Service, with an example of Zappos Terms of Use.

If your website or mobile app requires users to pay, then check the following to see how to design your terms of service. Even if you provide a free service, the following tips will be useful.
Eric Goldman, a Professor of Law, gives Zappos Terms of Use as an example of how NOT to design your websites Terms of Service.

You Should
  1. Have the user scroll-through your Terms of Service (TOS) and click the “I Agree” button – explicitly acknowledging they have read the terms.

    Having users implicitly agree to your terms because they visited your website (like Zappos did) is not recognized.
  2. Have the user click the TOS at signup or when they are about to make a purchase.

  3. If the terms change, present them the next time the user logs in and follow step 1.
    For example, every time Apple’s Terms of Use change, they present the new terms to the users, have them scroll-through and then click on “I Agree”

A background on Zappos terms of use -

Following an attack on Zappos’s website where a lot of user data was compromised, lawsuits were filed against Zappos. 
Zappos tried to send the lawsuits to arbitration based on an arbitration clause in its user agreement.  Recently, a federal court struck down Zappos.com's user agreement, denying Zappos' arbitration request.  This is an unfortunate ruling for Zappos, because its contract--now dead--would have been quite helpful in combating this high-profile and potentially very expensive data security breach lawsuit.   More importantly, the mistakes Zappos made in its user agreement--though common throughout the Internet--are completely and easily avoidable.

How the Court Viewed Zappos Terms of Use 
we cannot conclude that Plaintiffs ever viewed, let alone manifested assent to, the Terms of Use. The Terms of Use is inconspicuous, buried in the middle to bottom of every Zappos.com webpage among many other links, and the website never directs a user to the Terms of Use. No reasonable user would have reason to click on the Terms of Use, even those users who have alleged that they clicked and relied on statements found in adjacent links, such as the site's “Privacy Policy.”
The arbitration provision found in the Zappos.com Terms of Use purportedly binds all users of the website by virtue of their browsing. However, the advent of the Internet has not changed the basic requirements of a contract, and there is no agreement where there is no acceptance, no meeting of the minds, and no manifestation of assent. A party cannot assent to terms of which it has no knowledge or constructive notice, and a highly inconspicuous hyperlink buried among a sea of links does not provide such notice. Because Plaintiffs did not assent to the terms, no contract exists, and they cannot be compelled to arbitrate.

Tags: how to design user agreement, how to design terms of service, zappos lawsuit, zappos terms of use, zappos faulty terms of use, tips for terms of service