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The TLDR Act is well intentioned. It’s also overdue and woefully inadequate.

January 19, 2022 4 min read

Ironclad Clickwrap GM, PactSafe Founder

Ask the person next to you a simple question: How many contracts did you sign today?

On any given day, most people would say none. Little do they know, when they bought that ottoman on Wayfair, ordered a meal via Doordash, and downloaded three new apps to their phones, they actually “signed” at least five. 

Terms of Service: They’re everywhere. Before anyone uses a piece of software, they’re almost always required to agree to a set of terms; these “Terms of Service” act as a contract between a service provider and the people using the service. Without a doubt, Terms of Service are the most voluminous form of contract on the planet – yet nobody reads them or has any idea what they’re agreeing to when they sign or accept. 

If Congress has its way, that may change. Last week, a first-of-its-kind bill was introduced that aims to create government oversight over Terms of Service. It’s called the Terms-of-Service Labeling, Design, and Readability Act, or hilariously, the TLDR Act. The act is well intentioned and rightfully focuses on accessibility and transparency, but is naive in its simplicity.  

What it gets right: Striving for transparency

The biggest problem with Terms of Service contracts has always been their unbearable length and tendency to include thousands of words only lawyers understand. The TLDR Act aims to remedy that by requiring summary statements for all Terms of Service that are “concise, easy to understand, machine readable, and located at the top of the existing terms of service page.” It would also require a “change log” to show how a company’s Terms of Service have changed over time, and that the long version of the terms be “tagged” in a standardized way that allows “advocates and browser extension developers” to analyze differences and similarities across contracts at scale in a way that is currently infeasible.  

These are all measures intended to increase transparency by making the terms more understandable and creating visibility into how the terms change over time. This level of transparency is nearly always absent, although some data privacy regulatory schemes (GDPR, for example) have created increased transparency when it comes to privacy policy consents. The spirit of the act, in this sense, is noble and spot on. 

In practice, though, this is a massive oversimplification of what is really needed.

Where it falls short: Everywhere else

Here at Ironclad, we’ve processed nearly 1 billion terms of service and clickwrap acceptance events for our customers. The TLDR Act leaves us with plenty of unanswered questions:

  • Are we talking about Terms of Service, Privacy Policies, or both?
    Privacy policies typically spell out what data is being collected, how it is used, how it may be deleted, and more; Terms of Service spell out things like liability waivers and class action waivers. The Act addresses all of this, but only mentions Terms of Service. Any act dealing with this subject matter needs to cover any and all legal terms.
  • How will this jive with the patchwork of differing data privacy related laws and regulations? 
    There is a ton of overlap here, which would lead to compliance and enforcement nightmares.
  • What about small businesses?
    The TLDR Act excludes “small businesses” (as defined in the Small Business Act), despite the fact that mobile apps, even ones developed in a basement, could easily be downloaded millions of times without ever meeting the definition of a small business.
  • And how about summaries and change logs?
    A summary version of terms still may not disclose everything needed to be disclosed in a transparent way, and a change log is meaningless unless you can tell a consumer exactly when, and to what version, they agreed.
  • How do you account for an app’s UI design and font size?  
    One of the biggest problems with terms of service is 1) how and where consumers are  put on notice that they are agreeing to them, and 2) how they are adequately provided an opportunity to review them. Solving the transparency problem starts there, yet this is completely omitted from the Act.
  • And Terms of Service that are generated dynamically?
    20 years ago, Terms of Service were all static, one-size-fits-all contracts. Today, dynamically generated Terms of Service are increasingly common, generated on the fly based on what someone is buying and where they live. Summary versions may be seemingly straight-forward for static Terms of Service, but will be incredibly complicated to create and maintain with today’s dynamic terms.  

Fixing the issues with Terms of Service and the TLDR Act

We applaud lawmakers in their push to make it easier for consumers to understand just what they’re signing away via these Terms of Service agreements. However, while the Terms-of-Service Labeling, Design, and Readability Act (TLDR Act) advances a necessary conversation on privacy, accessibility, and corporate transparency, the current plan is naïve in its simplicity and scope. 

In order to create real change, Congress must look beyond surface-level privacy issues and that which they can see in a simple browser session. A deeper understanding of how Terms of Service are maintained, managed, and presented to consumers will lead to a more thoughtful and adequate act that will actually accomplish its intended purpose. 

Learn more about Terms of Service in our Clickwrap Trends Report, which features the latest statistics, best practices, and checklists to help. 

About Ironclad

Ironclad is the #1 contract lifecycle management platform for innovative companies. L’Oréal, Staples, Mastercard, and other leading innovators use Ironclad to collaborate and negotiate on contracts, accelerate contracting while maintaining compliance, and turn contracts into critical carriers of operational business intelligence. It’s the only platform flexible enough to handle every type of contract workflow, whether a sales agreement, an HR agreement or a complex NDA. The company was named one of the 20 Rising Stars on the Forbes 2019 Cloud 100 list, and is backed by leading investors like Accel, Y Combinator, Sequoia, and BOND. For more information, visit www.ironcladapp.com or follow us on LinkedIn and Twitter.

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