Terms of Service: What Entrepreneurs Should Know

When launching a website or app, legal terms might not be your first concern, but you can’t ignore them. Depending on how your service operates, you may need Terms of Service (TOS) to protect your business and set clear rules for users.

Related: Privacy Policies 101 | DMCA Policies 101

What Are Terms of Service?

Terms of Service (sometimes called Terms of Use or Terms and Conditions) are legal agreements that users accept when they use your website or app. They create a set of enforceable rules and typically cover:

• Ownership of your intellectual property
• Your right to terminate user access
• Liability limitations if your service goes down
• Restrictions on automated scraping and bots
• Jurisdiction and dispute resolution requirements

Some businesses also include their DMCA/Copyright Policy in their Terms of Service, while others keep it separate.

Why You Might Need Terms of Service

Most states do not require Terms of Service, but some do require a Privacy Policy, especially if you collect user data. Aside from legal requirements, here’s why you might need TOS:

• Content Protection: Prevent unauthorized use of your content.
• Bot & Scraper Restrictions: Prohibit automated systems from extracting data.
• User Account Rules: Define who can create accounts and how they can be terminated.
• Liability Protection: Disclaim responsibility for user actions or service downtime.
• Dispute Resolution: Specify applicable laws, courts, or arbitration requirements.
• Payments & Content Uploads: If your service involves user-generated content or payment processing, having strong legal terms is essential.

Brief Mentions of Global & State-Specific Laws

While U.S. federal law doesn’t generally mandate Terms of Service (as of February 2025), certain jurisdictions impose stricter regulations:

• US State Laws (CO & CA for example): Some states, like Colorado and California, have specific requirements regarding Terms of Service and Privacy Policies. If they apply to you, you need to ensure your policies comply with the applicable requirements.
• EU (GDPR): Websites with European users may need clear terms for data collection and user rights.

What to Include in Your Terms of Service

Here are key provisions to consider:

• License to Use: Define how users can access your website or app.
• Prohibited Uses: Restrict activities such as scraping, bot usage, and other unauthorized access.
• Age Limits: Many sites prohibit users under 13 to comply with COPPA.
• User Accounts: Set rules for account creation, management, and termination.
• Intellectual Property: Specify ownership rights for your content and user-uploaded materials.
• User-Generated Content: Define user rights and responsibilities regarding posted content.
• DMCA Policy: If you host content, include a Digital Millennium Copyright Act (DMCA) Policy.
• Payments & Refunds: Clarify how fees, refunds, and cancellations work.
• API Use: If applicable, provide API-specific terms or a separate agreement.
• Disclaimers & Liability Limits: Protect your business from issues like downtime or third-party misuse of shared data.
• Arbitration Agreements: Require users to resolve disputes through arbitration instead of lawsuits.
• Governing Law & Jurisdiction: Define which state’s laws apply to disputes.
• Right to Modify Terms: Retain the ability to update your Terms of Service, provided users receive notice.

Smart Next Steps for Your Business

There are several ways to draft Terms of Service:

• Write your own (not recommended unless you understand legal language).
• Use language from similar websites (but avoid copyright infringement).
• Generate terms using online tools (may lack customization and legal strength).
• Hire a startup lawyer (the safest approach for legally sound and customized terms).

While every business is different, having clear, enforceable Terms of Service can help protect your website, app, and company from unnecessary risks. Whether you’re operating in Kansas City, Boulder, or beyond, taking the time to get this right is a smart legal move for your business.

*This article is general in nature and is not legal advice.