Website Legal Agreements

What companies can learn from PayPal's Terms of Service blunder

Don’t get caught trying to pull a “fast one” on your users or customers.

In the era of social media, it’s easy for one decision by a company to damage the good reputation built over many, many years of doing business. Any breaking of the consumer’s trust on issues that might be considered minor internally can end up blowing up into a major storm on the Internet, and ultimately affecting your bottom line. Now more than ever, it’s important for companies to be forthright about the information and policies found within often long and hard-to-read terms of use and privacy policy agreements. It's even more important to be open and honest with users when a major change occurs to previously accepted terms.

PayPal discovered the value of transparency the hard way last week. The online payment provider worked a new provision into its policies, allowing the company to send marketing text messages and phone calls to users on behalf of Paypal. In addition, Paypal would also provide these phone numbers to partners for similar use, and provided no option to opt-out initially. Tech bloggers and those on social media reacted quickly. Many, like this user, posted to the company's Facebook page and were instructed to close their account if they did not agree with the new terms. (Screenshot via TechCrunch)

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After the social media storm, Paypal’s now of course backtracked on the issue a bit since first debuting the policy. The company now maintains that they will allow consumers to opt-out of the new provision. Still, the damage to the organization's reputation is done.

While the idea is likely misguided on the whole, Paypal could have at least mitigated some of the early damage by simply notifying users with a short e-mail of the change and offering an initial opt-out. It's a quick, easy way of keeping your users' trust -- while also allowing for direct, early feedback. Consumers are more likely to understand a poorly-thought out policy that may need modification, if it's presented in a forthright manner. Instead, it makes what might have just been a poorly-thought out decision look far more nefarious – as if the company wanted to pull a “fast one” on consumers while they weren’t looking.

Learn how PactSafe makes it quick and easy for anyone within a company to notify consumers of changes in their online agreements. Take our tour today.

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