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Canadian Businesses and Consumers Both Face Risk from Poorly Understood Terms and Conditions Statements

Oct 28, 2015 7:45 AM

A new report by the Consumers Council of Canada cautions that overly complex privacy and terms and conditions statements can put Canadian consumers and businesses at significant legal risk and undermine the trust between customers and online businesses.

This comprehensive study, funded by the .CA Community Investment Program, included qualitative reviews of online terms and conditions statements, interviews with experts, as well as a survey of Canadian Internet users. 

"We believe enlightened companies will see these recommendations as a way to reduce their own business risk and strengthen trusted relationships with their customers," said Howard Deane, who authored the report for the Consumers Council of Canada.

Key facts 

  • A large number of consumers do not read or understand the terms and conditions statements that they agree to. Consumers cite the complexity and length of these statements as core to their decision to ignore them. Statements often have one-sided wording, leaving consumers with little choice but to accept. 
  • Most consumers are at risk due to misunderstanding online terms and conditions statements and the liabilities they assume, including privacy risks. Misunderstood agreements could find their legal standing challenged by consumers.
  • Complex terms and conditions statements may undermine the trust between consumers and businesses and consumers report feeling that companies with complex terms and conditions do not have their best interests in mind. The report cautions that businesses are undermining their relationships with their customers and that rights-consciousness among consumers is growing.
  • The Consumers Council of Canada has made 12 key recommendations, from including plain language summaries, to allowing consumers to print, email and save agreements, to writing headlines and tables of contents in the “consumer voice” to facilitate understanding. 
  • The Consumers Council of Canada pointed to the Canadian e-commerce company Shopify as showing awareness of the need for consumer-friendly terms and conditions statement. The company includes both a full legal text, but also a plain language summary of the terms, with easy-to-understand reviews of changes. 

Download the full report and set of recommendations by clicking here. 

"The Consumers Council of Canada is pleased to be able to engage the important public discussion about better ways to reach agreement online," said Aubrey LeBlanc, President, Consumers Council of Canada. "The Council respects the commitment CIRA showed to a safer more prosperous Internet for all by financially supporting the research project leading to the guide. The views in the guide are ours, not theirs. But we share with them the commitment to make the Internet a great ‘place’ for consumers."

David Fowler, director of marketing and communications for the .CA Community Investment Program, said: “Trust and confidence is absolutely critical to electronic commerce and this practice of companies using long, complex, and poorly-understood terms and conditions statements has the potential to undermine these important commercial relationships. With so much at stake for the growth and development of e-commerce, it’s critical that businesses come to terms with this issue and communicate with their customers in ways they can understand.”

About .CA and the Community Investment Program

Through the Community Investment Program, .CA funds projects that demonstrate the capacity to improve the Internet for all Canadians. The .CA team manages Canada’s country code top-level domain on behalf of all Canadians. A Member-driven organization, .CA represents the interests of Canada’s Internet community internationally.

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