Insureon Blog

Reminder: Communicating with Customers Can Prevent Professional Liability Lawsuits

14. July 2014 08:34

Depressed silhouettes of computer users

By now you’ve likely heard that Facebook has published a study in which the social-media giant manipulated the content on users’ feeds to see if it had any effect on said users. The study found that users who were exposed to more “negative” feed items tended to post more negative posts as well. The same was true of the reverse.

Many Facebook users were appalled by the news, and now the Wall Street Journal’s tech site Digits reports that the Electronic Privacy Information Center, a privacy watchdog group, has filed a complaint with the Federal Trade Commission (FTC) about the study. The group claims that Facebook’s User Agreement did not inform users that their data would be available to researchers.

Facebook denies this, saying that this “research” is covered under the section of the agreement that asks “permission to use their information to prove and enhance the services” Facebook offers.

While it’s unclear whether the complaint will progress or not, one thing is for sure: small-business owners can learn a lesson from Facebook about User Agreements.

What Is a User Agreement?

A User Agreement is a legal agreement between a business and its customers that describes what kind of customer information the business will use and how it will use it. Usually, a customer must agree to these terms before it can use the business’s product or service. You’ve probably clicked through several of these agreements on the websites you frequent – likely without reading them.

Even though most users accept these agreements without reading them, business are held legally responsible for violating the terms set forth in the agreement. For example, a judge recently allowed a lawsuit against professional-networking site LinkedIn. According to Insurance Journal, LinkedIn allegedly violated its User Agreement by emailing its users’ contacts just a few more times than was allowed by the agreement.

If your business offers products or services that require you to collect customer data, you should have a User Agreement. What is considered customer data? Take a look:

User Agreements – if used properly – can help protect a business from lawsuits by clearly stating the business’s intentions. But if you don’t effectively communicate with your customers, you could find yourself in the middle of a legal battle anyway.

How Good Communication Prevents Liability Lawsuits

Arguably, the primary issue with Facebook’s User Agreement is its lack of specificity. Facebook can claim that “research” helps “enhance” users’ experience, but the opposition can argue that the agreement wasn’t clear enough.

There should never be any gray area when it comes to your business’s products or services. When a customer expects one thing and receives another, they can sue your business. This type of lawsuit is called a professional liability lawsuit.

To prevent these costly and inconvenient claims, your business needs to keep the lines of communication open. And remember, good communication extends beyond User Agreements. It should be incorporated into every facet of your business. That means you should…

These are just a few steps you can take to reduce your risk of a professional liability lawsuit. Unfortunately, because of the human factor at play here, you can’t always avoid a lawsuit. A customer can sue you whether or not you’ve done anything “wrong.”

That’s why insurers provide Professional Liability Insurance (aka Errors and Omissions Insurance). It helps you pay for lawsuits over issues related to your work – including miscommunications. 

protect your assets


Errors & Omissions | Errors and Omissions Insurance | Professional Liability Insurance | Risk Management | Small Business | Small Business Risk Management | Tips for All Small Businesses

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