Laws that govern the Terms of Service for an eCommerce website
If you have an eCommerce website, the disclosures that are contained within your Terms of Service may be dictated by certain laws. First, if you offer a subscription service to California residents that automatically renews, you may need to comply with the California automatic renewal law. this law requires businesses to provide the following disclosures to consumers before they sign up for a subscription:
- That the subscription will continue until the customer cancels;
- The description of the cancellation policy that applies to the subscription;
- The recurring charges that will be charged to the consumer’s credit or debit card or payment account as part of the automatic renewal plan or arrangement, and that the amount may change. If that is the case, the amount to which the charge may change, if known;
- The length of the automatic renewal term or that the service is continuous, unless the length of the term is chosen by the consumer; and
- The minimum purchases obligation, if any.
If this law applies to you and your Terms of Service do not include the above disclosures, any products or services that the customer received through the subscription will be considered a gift and you will have to issue refunds to your customers. In addition, Section 5 of the Federal Trade Commission Act require sellers to disclose the material terms of an automatic renewal offer including key terms such as the existence of the offer, the offer’s total cost, and how to cancel the offer. If you are using the Termageddon Terms of Service generator, simply answer “yes” to the “do you offer a subscription” question and answer the questionnaire and the subscription terms will be added to your Terms of Service.
Consumer protection laws
The second set of laws that can impact the Terms of Service are consumer protection laws. Consumer protection laws dictate the terms that apply whenever a consumer purchases goods, services, or digital products, whether in a physical store or online. If your business is located in the United Kingdom or in Australia and you sell to consumers, you will need to ensure that your Terms of Service for such sales comply with the laws of your country. Consumer protection laws can affect the following aspects of your Terms of Service:
- The listing of the prices of the goods, services or digital products that you sell online and whether those prices include taxes and other fees;
- Whether buyers are able to cancel their purchase and if you can charge a cancellation fee;
- Whether you can offer refunds;
- Whether you offer warranties and the types and length of the warranties that you offer;
- The remedies that are available to buyers;
- If you accept deposits, the terms surrounding such deposits;
- If you accept advance payments, the terms that apply to such payments; and
- The extent to which you can limit your liability and damages in case of a dispute.
If you are using the Termageddon Terms of Service generator and select that you are based in the United Kingdom or Australia, the generator will help determine if consumer protection laws apply to you. If such laws do apply, the generator will provide you with notifications that will help you make the right selections under the appropriate questions (such as “what warranties do you offer?”) and will include consumer disclosures in your Terms of Service.
International conventions and codes
The last set of laws that need to be considered in a Terms of Service for an eCommerce website are the United Nations Convention on Contracts for the Sale of International Goods, the Uniform Commercial Code and INCOTERMS. These conventions and codes can apply to online sales by default and can put your business at a disadvantage by controlling important terms such as the ability for a customer to cancel an order or receive a refund. If you do not want these terms to apply to you by default, you must expressly disclaim them in your Terms of Service. If you use the Termageddon Terms of Service generator, your Terms of Service will expressly disclaim these conventions and codes so that you, as the business owner, can determine the terms that apply to the sale.
What your Terms of Service should contain
Regardless of whether you need to comply with the laws listed above, a Terms of Service is a great way to answer commonly asked customer questions thus moving them towards making a purchase and can help you limit your liability and protect your business. A Terms of Service for an eCommerce website should include the following:
- Your company name and how consumers can contact you;
- Who the Terms of Service applies to;
- Information on how to make a purchase, including:
- What you offer for sale;
- The prices of such goods, services or digital products, where the price can be found, or how the price will be calculated;
- Whether those prices include taxes or other fees;
- How customers can make a purchase;
- What third party payment processor is used for payment, if any; and
- What payment methods are accepted.
- Your cancellation policy, which should provide whether or not customers can cancel their purchase. If cancellations are allowed, your Terms of Service should also disclose:
- When a customer can cancel their purchase;
- How a customer can cancel their purchase;
- Whether you will charge a cancellation fee; and
- Whether you will issue a refund to a customer that cancels their purchase.
- Your refunds, policy, which should provide whether or not you will issue refunds to customers. If you do offer refunds, your Terms of Service should also disclose:
- Under what circumstances customers qualify for a refund;
- When a customer qualifies for a refund; and
- If you sell goods, whether the customer needs to ship the goods back to you and who will be responsible for the costs of shipping.
- If you sell goods, your shipping policy. The shipping policy section should include information about the cost and timing of shipping;
- If you accept advance payments or deposits, your Terms of Service will need to disclose whether the customer will receive a refund of such payments if their purchase is cancelled;
- What warranties, if any, you offer on the goods, services, and digital products that you sell on your website;
- What remedies, if any, are available to the customers who make a purchase on your website;
- If you offer subscriptions, your Terms of Service will need to include the disclosures listed above (see “subscriptions”);
- If consumers can create an account on your website, the rules for using that account;
- If consumers can make comments or upload content onto your website, whether some types of comments or content are prohibited;
- Prohibited uses of the website (e.g. no hacking, copying of text, or using the information on the website to spam or harass others, etc.);
- A clause that allows you to correct any errors on the website, such as pricing errors;
- A clause that limits your liability and the amount of damages that you may be responsible for in case of a dispute between you and a customer or a website visitor;
- A clause that limits your liability in case a user clicks on a link to a website operated by a third party from your website and is then injured by that third party website;
- A clause that makes it clear that the website and its contents are your intellectual property;
- A clause that provides the necessary disclosures to achieve the safe harbor of the Digital Millennium Copyright Act, which may protect you from copyright infringement lawsuits in certain cases;
- A link to an industry or trade code of conduct that you subscribe to, if any;
- A clause ensuring that all disputes regarding the website, including the purchases made on the website, including the purchases made on the website, will be resolved in a forum most convenient to you;
- A clause expressly disclaiming INCOTERMS, the Uniform Commercial Code, and the United Nations Convention on Contracts for the Sale of International Goods;
- How you will notify customers and website visitors of changes to your Terms of Service; and
- Where individuals can contact you if they have questions about your Terms of Service.
It is important that the Terms of Service for an eCommerce website contains all of the above disclosures as they not only help answer commonly asked customer questions but will also protect the website owner and limit liability. If you are looking for a comprehensive Terms of Service for your website, consider using the Termageddon Terms of Service generator that includes all of the above disclosures and more.
Donata is the Co-founder and President of Termageddon, an auto-updating generator of website and application policies. She is a licensed attorney and Certified Information Privacy Professional. She also serves as the Vice-Chair of the American Bar Association’s ePrivacy Committee and the Chair of the Chicago Chapter of the International Association of Privacy Professionals. In her free time, Donata enjoys beekeeping, hunting for morel mushrooms, and walks with her husband and two dogs.