Monday, May 15, 2023

Terms of Service Labeling, Design, and Readability Act (TLDR)


  1. What exactly is the Terms of Service Labeling, Design, and Readability Act?

The TLDR is nonpartisan and bicameral legislation that intends to make Terms of Service agreements more comprehensible, transparent, and accessible to internet consumers.

Congresswoman Lori Trahan (D-MA-03), Senator Ben Ray Luján (D-NM), and Senator Bill Cassidy, M.D. proposed it on January 13, 2022. (R-LA). It will become law, if enough congress members vote in favor of it.

It is now in the Committee on Commerce, Science, and Transportation of the United States Senate.

2. Who is required to comply the TLDR?

You must comply with the TLDR if you operate a website or have a commercial, for-profit business with an online presence and are physically situated in the United States, a U.S. territory, the District of Columbia, or a federally recognized Indian Tribal jurisdiction.

Having said that, the TLDR exempts some small enterprises "as defined in section 3 of the Small Business Act."

3. What is required by the TLDR?

The TLDR has three major requirements:

At the beginning of your Terms of Service agreement, you must include a short-form overview of your Terms of Service, as well as a "graphic data flow diagram."

You must display your whole Terms of Service agreement in an interactive data format.

Let's look at each of these needs individually, as well as the present condition of what would be necessary to comply.

The Short-Form Terms of Service Summary Statement

The TLDR requires internet firms to place a "summary statement" of their Terms of Service on their websites.

Consider the placement and content criteria for this summary statement.

4. Where Should You place the Summary Statement on Your Website?

Companies must place the summary statement at the top of their Terms of Service pages on their website.

Format and Contents of a Short-Form Summary Statement

The summary statement must offer a concise overview of the whole Terms of Service.

The short-form summary must be machine readable and understandable to normal users. The act suggests that it may incorporate visual symbols, hyperlinks, tables, and other measures deemed useful by the Commission.

The following information must be disclosed in the summary statement:

  • The estimated time required to read the complete Terms of Service, plus the word count
  • The types of sensitive information that your business handles
  • All sensitive information that your business needs to perform its services.
  • All sensitive information required by your business to give additional features
  • All critical information required for future growth
  • Users' legal liabilities and any rights they transfer to your business (e.g., mandatory arbitration, licensing, waiver of moral rights)
  • Previous versions of your Terms of Service
  • Logs of Change
  • Whether your organization offers users deletion services along with instructions on how to erase their sensitive information or ensures that your company no longer uses that information, and
  • A list of data breaches notified to consumers in the previous three years under existing federal and state legislation.

5. What is Sensitive Information in the context of the TLDR?

Under the TLDR, sensitive information comprises the following:

  • Health-related information
  • Biometric details
  • Geolocation data that is precise
  • Number of Social Security
  • Race, color, religion, national origin, gender, age, or disability information
  • A communication's content and parties
  • Audio and video recordings made using a consumer device
  • Financial information, such as bank account numbers, credit card numbers, debit card numbers, or insurance policy numbers
  • Online browsing history in respect to the previously given informatio

The Data Flow Graphic Diagram

Your business must incorporate a graphic data flow diagram in addition to a summary statement. This should come just after the short-form summary statement.

The act allows for recommendations on what this diagram must contain to be published 360 days after the act is adopted.

As of this writing, the only information provided is that the diagram will need to display how a user's sensitive information is shared with company affiliates, subsidiaries, and third parties.

Your service terms must be in an interactive data format.

While no additional details have been released, the TLDR indicates that firms will be required to tag "portions of the entity's terms of services according to an interactive data format."

An interactive data format is a type of electronic data format in which information is recognized using an interactive data standard such as eXtensible Markup Language (XML).

6. TLDR enforcement

All TLDR violations will be handled as violations of the Federal Trade Commission Act involving unfair or misleading conduct or practices.

All enforcement and penalties for TLDR violations will be handled in the same way, with the same jurisdiction, powers, and duties, as if the Federal Trade Commission Act were an integral element of the TLDR.

As a result, anybody who breaches the TLDR faces "the penalties...provided in the Federal Trade Commission Act."

State Attorneys General are in charge of enforcing the enforcement.

If state attorneys general think that at least 1,000 state residents have been endangered or harmed by someone who has broken the TLDR (such as a business's employee), they may file a civil action in a district court of the United States on benefit of "the residents of the State."

The attorney general may file civil proceedings to enforce the law and recover restitution, damages, or other recompense on benefit of state residents.

7. Summary

 The TLDR aims to safeguard consumers by making Terms of Service agreements more clear and comprehensible.

These agreements, known as "Terms of Use" or "Terms and Conditions," explain how website visitors may use the website or application in issue.

These agreements have gotten more complex and confusing in recent years, making it difficult for consumers to grasp their rights and duties. This can have serious ramifications for website visitors.

Some contracts, for example, compel consumers to sign away their right to sue, whilst others include language that remove a company's need to notify consumers of changes to its Terms of Service. Furthermore, certain Terms of Service agreements let businesses to acquire personal data and share it with third parties.

The TLDR will compel companies to offer a basic, succinct, and user-friendly description of critical agreement material, such as what data is used and how it is gathered and shared. The summary must be provided in simple English so that consumers may make an educated decision about whether or not to accept the terms.