Why do terms of service and privacy policies need to exist?

[dropcap size=small]W[/dropcap]e’ve all clicked through these boring legal documents that seem to be an ever-present barrier to fun. However, just because no one actually reads them doesn’t mean that they aren’t vitally important for your mobile game. Here’s why:

There are a few key reasons to have a Terms of Service for your website or mobile app.

Defining the business relationship:

Yes, games are fun. But if you are putting a product out there in the world, you are entering into a business relationship with the user. Just like any business relationship, getting it in writing is necessary so there is no confusion as to the boundaries and terms of that relationship.

For instance, if your app uses virtual currency, is there a value to it outside of the game? Can a customer get a refund if they have an issue with the virtual money? What happens if something erases their profile? All of these questions should be answered in the Terms of Service, to avoid any uncertainty going forward.

Other issues, like User Generated Content and how a person acts in-game should be addressed in order to give the app creator the power to terminate accounts and take other action against infringers.

Protection from copyright claims:

In order to get protection under the safe harbor provisions of the Digital Millennium Copyright Act, the service provider must list their agent that receives copyright complaints. This is usually done in the Terms of Service, along with a description of what information must be provided in the DMCA takedown notice.

Limiting liability:

Never underestimate the power of a user to do something dumb. For those that, for whatever reason, rely on the mobile app or game for some important purpose, it is important that the Terms of Service limit any liability. As a basic example, suppose that a person pays $1.99 for an alarm clock app. The alarm fails to work properly and the person misses an opportunity that could have gained them a lot of income. Regardless of whether such a lawsuit has any merit, by agreeing to not hold the app creator liable, they are essentially giving up their right to sue over these damages.

When the app creator is a sole proprietor, limiting liability by contract is very important to protect their personal assets from a lawsuit.

It’s the law:

In some jurisdictions, it is required by law that the mobile app or service provider have a conspicuously posted Privacy Policy. Under COPPA, when a game is directed at children under 13, or the creator has actual knowledge that it is being used by children, there must be a policy in place stating how the child’s personal information is handled. If the mobile app is running advertisements that use personal information to change the display ads or if there are cookies or other tracking methods, there should be a Privacy Policy.

Even for games not targeting children (which would arguably be very few), the state of California requires a Privacy Policy that meets certain standards. Failure to have this while distributing the game in California could lead to action by the state attorney general.

In addition to this, the EU and many U.S. states have data privacy laws that must be followed. An attorney should be consulted prior to taking any personal information from users.

Again, it defines the relationship with the user:

Making it clear to users what information you or a third party store or track about their usage is just good business practice. Look at the reaction that many people have whenever a high-profile company changes its Terms of Service or Privacy Policy; users are interested in this information because it often impacts them personally.

Openness is the best strategy to use regarding people’s private information. Even if people don’t read the Privacy Policy, it’s important that it is there.

For help crafting a Privacy Policy or Terms of Service for your mobile app or website, feel free to contact a game lawyer. And check out my FREE eBook, “5 Legal Moves That Every Game Developer Should Make.” It covers numerous legal issues that game devs face, from business formation to intellectual property protection.

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