Why You Need Terms of Service and Acceptable Use Policy for Your Hosting Business?

Posted by on 1/26/2011
You’re so busy, and you got your webhosting business to run. Why do you need to concern yourself with a Terms of Service (ToS) agreement or an Acceptable Use Policy (AUP) for your customers? What are these forms anyway and why do you need them? This article explains what these documents are, why you need them, and where to get them. So what are Terms of Service and Acceptable Use Policy forms? First of all, many people consider the ToS and AUP documents interchangeable but they are two distinct legal documents. Terms of Service (ToS) is used to describe the agreement that you and your client have over the provision of your service. You know when you sign up for a new credit card? All of that fine print that the credit card companies tell you to read is their Terms of Service. This is where you cover topics like fees, payment terms, warranties, limitation on damages, etc. Acceptable Use Policy (AUP) is a little harder to describe but this is where you basically describe what clients will be allowed to do on your network. This is where you need to sit and think of what the worse possible things people can do on your network and how you want to be able to shut them down as soon as possible. Things like fraudulent behavior, using your resources to store warez or cracks, things harmful to minors, basically anything illegal, unethical, or you have a problem with it and don’t want it on your network e.g. pornography or racist inflammatory remarks. Just from the descriptions above, you should already have a good idea of why you want to have one of each type of document in place for your business but just in case, we’ll explain next Why you need to have your Terms of Service and Acceptable Use Policy in place. Imagine getting a credit card from a company that had drafted a Terms of Service agreement. Think about all the fun that you could have with that card and not worry about any late fees, returned check fees, annual fees, etc. Consider all the headaches that the credit card company will be dealing with between their customers because they hadn’t put anything in writing. You wouldn’t want to be that credit card company, would you?So with that in mind, there are three main reasons why you need a Terms of Service and an Acceptable Use Policy for your Webhosting Business: 1.) Increase Profits 2.) Reduce Costs 3.) Mitigate Risks Increase Profits You can use your Terms of Service to increase profits. One way to do this is to tack on fees for any behavior you can think of on the customer’s part. Reduce Costs Use your Acceptable Use Policy to put restrictions on what you customers can do to you. You don’t want to have a restaurant where customer can eat all they want if that’s not how you set up your business. While a good percentage of your customers are reasonable, don’t let that 10% take advantage of you and put you out of business (or at least eat up your profit). Mitigate Risks You can use both your Terms of Service and your Acceptable Use Policy to mitigate risks to your business. Use your Terms of Service to set limitations on expectations on your customers’ side. Warranties and limitations on damages need to be specified up front. Use your Acceptable Use Policy to cover any legal wrangling that may come in the future. Be clear that your webhosting business will only support legal ventures and nothing more. You don’t want to be held liable like the landlord who knew that his tenanets were conducting illegal business. Where to get your Terms of Service and Acceptable Use Policy. The last thing to remember about having both an AUP and ToS on your website is that it is vital that these be in place from Day One of your web hosting site; otherwise, you’re not covering all of your bases. You can retain legal counsel to prepare these documents for you or purchase your AUP and/or ToS at www.Hostlegal.net