Terms of Service Law in the United States

Terms of Service are legally binding if they meet two requirements: conspicuous notice and unambiguous user consent. Here’s what your document must include.

Are Terms of Service legally enforceable?

Yes, Terms of Service are legally enforceable contracts if they provide reasonably conspicuous notice of the terms and obtain unambiguous user assent. Federal appellate courts apply this two-part test for online contract formation (Daniel Berman v. Freedom Financial Network, LLC, 30 F.4th 849 (9th Cir. 2022)).

What clauses are legally required in Terms of Service?

Federal law does not prescribe universal mandatory clauses, but imposes conditional requirements and standards for specific contexts.

Electronic Contract Formation (E-SIGN Act)

Before obtaining electronic consent for legally required disclosures, providers must inform consumers of: - The right to receive records on paper or in nonelectronic form - The right to withdraw consent and any associated consequences or fees - Whether consent applies to a single transaction or ongoing relationship - Procedures for withdrawing consent and updating contact information - How to request paper copies and whether fees apply (15 U.S.C. § 7001(c)(1))

Consumers must also receive hardware and software requirements for accessing electronic records, and must consent electronically in a manner that reasonably demonstrates the consumer can access information in the electronic form that will be used (15 U.S.C. § 7001(c)(1)).

Copyright Safe Harbor (DMCA)

Platforms hosting user-generated content must include: - A repeat infringer termination policy, communicated to users (17 U.S.C. § 512(i)(1)(A)) - Accommodation of standard technical measures used by copyright owners (17 U.S.C. § 512(i)(1)(B))

Subscription and Automatic Renewal (Negative Option Rule)

For recurring billing programs, sellers must disclose clearly and conspicuously before obtaining billing information: - Pricing and charge frequency - Trial end dates and withdrawal deadlines - Cancellation methods (16 CFR Part 425)

Cancellation must be as simple as enrollment—if signup was online without human contact, cancellation must be available online without human contact. Proof of express informed consent must be maintained for at least three years.

Parental Control Notice

Providers of interactive computer services must notify customers that parental control protections are commercially available to limit minors' access to harmful material, provided at the time of entering an agreement with a customer for the provision of interactive computer service (47 U.S.C. § 230(d)).

Prohibited and Unenforceable Terms

Federal law voids specific categories of provisions regardless of contract language.

The Consumer Review Fairness Act applies only to "form contracts"—standardized terms imposed without meaningful negotiation opportunity, excluding employment contracts (15 U.S.C. § 45b(a)(3)). Businesses retain rights to remove reviews containing personal information, defamatory content, material unrelated to goods/services, or clearly false statements (15 U.S.C. § 45b(b)(2)–(3)).

Including terms that federal or state law renders unenforceable may constitute a deceptive practice under Consumer Financial Protection Circular 2024-03, regardless of disclaimers like "subject to applicable law."

How do I make sure my Terms of Service hold up in court?

Federal appellate courts apply a two-part test for online contract formation:

1. Reasonably conspicuous notice of the terms
2. Unambiguous action manifesting assent

Daniel Berman v. Freedom Financial Network, LLC, 30 F.4th 849 (9th Cir. 2022) established that notice fails when terms appear in "tiny gray font," hyperlinks blend into surrounding text, or action buttons give no indication of binding effect.

Mitch Oberstein; Gary Matty; Sophie Burke, on behalf of themselves and all those similarly situated v. Live Nation Entertainment, Inc.; Ticketmaster LLC, No. 21-56200 (9th Cir. Feb. 13, 2023) upheld enforcement where hyperlinks appeared in bright blue, notices sat directly above action buttons, and text explicitly stated: "By continuing past this page, you agree to the Terms of Use."

Browsewrap agreements—where terms are posted via hyperlink without affirmative action—are "only reluctantly enforced" and typically fail without clear notice near the relevant action (Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014)).

Clear and Conspicuous Standards

Multiple FTC regulations define this as: - Visual: Standing out by size, contrast, color, and location - Interactive media: "Unavoidable"—consumers should not need to click or hover to see material terms (16 C.F.R. §§ 464.1, 465.1(c)(4))

FTC staff guidance advises against relegating material disclosures to "terms of use," as consumers are highly unlikely to read them there.

Arbitration Clauses: Special Rules

The Federal Arbitration Act makes arbitration provisions "valid, irrevocable, and enforceable" for contracts involving commerce (9 U.S.C. § 2), but with critical exceptions:

• Sexual assault and harassment: No predispute arbitration agreement or class action waiver is enforceable for these disputes at the complainant's election; courts, not arbitrators, determine applicability (9 U.S.C. §§ 402(a)–(b))
• Warranty contracts: Binding arbitration is prohibited entirely (16 C.F.R. § 703.5(j))

Arbitration clauses require the same conspicuous notice and unambiguous assent as other terms. Whether a specific clause meets these standards depends on placement, font, color, and surrounding context—Ask Sawyer researches federal and state law to answer questions about whether your arbitration clause meets conspicuousness standards.

Common Pitfalls That Invalidate Terms

Can I be sued for content my users post?

Section 230 of the Communications Decency Act provides broad immunity: platforms generally cannot be held liable as publishers or speakers of third-party content (47 U.S.C. § 230(c)(1)), and are protected for good-faith content moderation decisions (47 U.S.C. § 230(c)(2)). This immunity does not extend to federal criminal law, intellectual property claims, or certain sex trafficking-related actions (47 U.S.C. § 230(e)).

Because the boundaries of "publisher" versus "platform" status depend on specific operational facts, Ask Sawyer researches how federal courts apply these standards to particular content moderation practices.

Where State Law Goes Further

The federal framework provides a national floor; states may impose additional requirements that are not preempted unless specifically indicated. For example, the Negative Option Rule explicitly does not preempt stronger state laws.

State comprehensive privacy laws—including the California Consumer Privacy Act, Virginia Consumer Data Protection Act, and Utah Consumer Privacy Act—grant residents specific rights to know, delete, correct, and opt out of certain data practices, with enforcement by state attorneys general. The federal baseline lacks equivalent comprehensive privacy rights.

For state-specific requirements, see: - The 50-state comparison of Terms of Service laws - Individual state pages at /law/state/[state]/documents/terms-of-service/rules