FTC Compliance & Regulatory Requirements
Your Terms of Service must comply with FTC regulations and UDAP (Unfair or Deceptive Acts and Practices) laws. Material terms must be clear and conspicuous. Your T&C cannot contradict representations made in marketing.
Key FTC requirements:
- Clear language: Avoid dense legal jargon. Terms must be understandable.
- Prominent disclosures: Pricing, cancellation, disputes must be obvious.
- Honest representation: Marketing cannot contradict T&C.
- Consumer protection: Don't exclude consumer rights provided by law.
Limitation of Liability & Disclaimer Clauses
You can limit liability, but there are strict limits. Courts enforce reasonable caps but void unreasonable ones.
Your T&C can state:
- Liability cap: "Our total liability is limited to fees paid."
- Exclude indirect damages: "Not liable for lost profits or lost business."
- Service warranty: "Service provided 'as is' without warranty."
You CANNOT exclude liability for:
- Gross negligence or willful misconduct
- Personal injury or death
- IP infringement claims (some states)
- Violation of consumer protection laws
Dispute Resolution & Arbitration Clauses
Arbitration clauses are enforceable if fair and transparent. You must provide a 30-day opt-out.
Include:
- Opt-out provision: "30 days to opt out of arbitration."
- Arbitration process: "Disputes arbitrated under JAMS or AAA rules."
- Cost allocation: "We pay fees for claims under $10,000."
- Class action waiver: "Parties waive right to class actions."
Payment & Billing Terms
- Pricing in USD, taxes added based on location
- Auto-renewal: reminder emails before each charge
- Cancellation: easy, anytime cancellation option
- Refunds: prorated based on billing period
ROSCA: Comply with the Restore Online Shoppers Confidence Act. Obtain explicit consent before charging, send confirmation emails, and provide easy cancellation.
Intellectual Property & User Content
- Platform content: protected by copyright, limited user license
- User content: users retain ownership, grant platform license
- DMCA compliance: provide report mechanism for infringement
Governing Law & Jurisdiction
- Choice of law: "Governed by laws of [State]"
- Jurisdiction: "Disputes in courts of [County], [State]"
Official US Resources on Terms of Service & Consumer Protection
For authoritative guidance on what US law requires in Terms of Service agreements, these federal sources are the definitive references:
- FTC Endorsement & Disclosure Guides — FTC rules on disclosures relevant to SaaS, marketplaces, and affiliate arrangements in your Terms
- FTC Privacy & Security Guidance — federal requirements for how Terms of Service must address data collection and user rights
- USA.gov: Consumer Protection Laws — overview of federal consumer protection statutes that affect what your Terms of Service can and cannot include