Privacy Policies & User Agreements

[Part I of II - Click here for Part II (coming October 2009)]

From the September 2009 Issue

We’ve gotten so used to computers and the Internet that we’ve grown complacent about something that used to be second nature, especially for those in the financial sector. Perhaps willingly blind or so increasingly multi-tasked, we enter into literally dozens of legal agreements each day without even reading the fine print. In fact, most of us essentially just say, “Okay, I trust you,” without even glancing at them.

These contractually binding agreements are the end-user license agreements (EULAs), terms of service and privacy policies for all of the programs you use, whether installed on your office and home computers or accessed via the Internet. Considering how much we rely upon these technologies for so many aspects of our professional and (increasingly) even our personal lives, our complacence should not be acceptable.

It isn’t feasible, of course, for users to be required to fully read such an agreement each time they use a program just in case there has been an update to a clause or a sentence has been reworded or deleted, resulting in a notable impact on the agreement. This is just as it wouldn’t be expected of a car owner to read the owners’ manual every day, or a homeowner to read their mortgage every day. These examples are much more static, however, than is a contract related to the use of a computer program, especially hosted programs and websites. But nevertheless, we consent to these technology usage agreements multiple times per day without examining them and without concern. After all, why should we be?

Before diving in, let me acknowledge the need for these agreement types and terms of service. Companies often spend years developing unique and useful technologies, and their investments need to be protected against potential copyright infringement, misuse or potential liability the company might face if users are not made aware of their own rights and responsibilities.

EULAS
For the most part, the term end-user license agreement is associated with traditionally installed software programs, whether downloaded or copied from a disc. They are generally a “contract of adhesion,” meaning that the user has the choice to take it or leave it, but has no negotiating power. They mostly set out the conditions in which the software may be used, by whom, sometimes where, and for what purposes. These contracts are much more likely to be static than web-based technology agreements, in that the user has the copy of the contract in the form it was in when the user agreed to its conditions (when they purchased or licensed it). That said, agreements for some of these programs can be altered, especially when updating the system or if the program has any online integration.

In the early years of consumer-level software development (and even occasionally to this day), the user license was often contained within the program on the disc itself, and the outer wrapping of the disc or packaging notified users that opening it meant they agreed to this, as yet unseen, contract. Believe it or not, there is no definitive court ruling on the viability of these agreements (there have been rulings in favor of both sides). Fortunately, this practice has mostly disappeared, with programs now offering the license during installation, usually requiring users to “Click Here” to consent to the terms and conditions and continue with the installation.