December 2, 2015
Business Management  |  9 min read

How to Be Transparent and also Cover Your Butt Legally

by Rachel Rodgers

"Honesty and transparency make you vulnerable. Be honest and transparent anyway."

-Mother Theresa*

It’s difficult to think of many contexts in which transparency is a bad thing, apart from maybe swimsuits, bathroom doors and, for the caffeine addicts among us, coffee. In fact, it’s likely that many of us, if asked, would say that the world could do with a lot more transparency—transparency in politics, transparency in journalism, transparency in business and—for the love of all things holy—transparency on Tinder. 

So while it’s true that we need more transparency in many areas of life—we must also acknowledge that there has been a marked push towards greater transparency in business, at least on the part of small to medium-sized companies, in recent years. 

In fact, transparency is currently touted as a revolutionary marketing tool. Forbes.com named the strategy of “radical transparency” as the the top marketing trend for 2015. Obviously, transparency as a marketing tool certainly isn’t the most altruistic form of transparency we could hope for, but this transparency trend is (probably) more to the benefit than detriment of (many) consumers. Because the bottom line is, the more consumers know about your business, the better off they are, even if you are only letting them behind the curtain for the purpose of selling them more of your stuff. 

Transparency doesn’t stand only to benefit your customers. If you have the right language (easily understood terms and disclaimers) in the right places (where they can actually be read), your business will benefit greatly as well in the form of legal protection. And we’re not just saying this because we are lawyers and we love long boring documents (also, we are lawyers and we love long boring documents). We are saying this because, in many cases, it’s the law, baby cakes. If you are doing business online, the Federal Trade Commission is watching you. Trust.

Although many companies have been willing to adopt transparent marketing strategies in hopes of boosted sales and an enhanced brand image, it has become clear (get it?) that this whole transparency thing is also a source of worry for companies. 

Many worry about the negative effects that transparency may have on their business, because it opens the door for increased scrutiny of every aspect of your business (often called “Corporate Responsibility Practices” ), including labor conditions, sustainability efforts (or lack there of) and customer service. Loss of competitive advantage as the result of increased transparency is also a present, and legitimate, worry. 

But, when done intelligently, transparency can make you (and your business) in a place of empowerment instead of vulnerability. 

As lawyers who devote our practice to supporting small businesses with corporate matters and intellectual property strategy and protection, we see increased transparency as far more of an opportunity than a risk. 

Our view is this: if you’re going to be standing in your see-through bathing suit in a glass bathroom drinking a weak-ass cup of coffee, you might as well do it on your own terms. In fact, we’d go so far as to say that the number one way to limit your liability when running an online business is to be honest with your website visitors (our actual human customers) at all times

At least in terms of customer service, social media leaves companies nowhere to hide these days, so it wouldn’t be crazy of you to gather up your skeletons, slap a sexy filter on them and slide those bad boys onto Instagram before someone else does it for you. #lettingitallhangout #transparencyisthenewnontransparency #awesome

But social media isn’t the only place– and in many cases it isn’t even the best place–  for you to communicate your policies and practices with your customers. There are lots of other lengthier, far more boring ways to do that. 

Legal documents for small businesses

In our practice, we spend a lot of our time drafting documents that govern the interaction between our clients’ businesses and their customers online, whether on blogs, websites or online stores. They are long and often boring, but they deliver important information that informs the consumer and protects the business owner. Here are a few of the documents that we help our clients create so that our their business is more transparent and their customers are more educated: 

●    Privacy Policies: These are one of those documents we mentioned earlier that, if you have a website, the law pretty much requires you to have (we’re talking state and federal). 

Hear this: if you collect even one iota of information on your website, you need a privacy policy. Your privacy policy tells the visitors of your site exactly what kind of info you collect from them and what you do with it. This includes stuff about Google Analytics, (those delicious) cookies, any mailing list development, use and storage of personal information and a heck of a lot more. If you don’t have one of these already, get one and get right with the world (and the law).

●    Terms & Conditions: Terms and conditions (also known on the streets as terms of use or terms of service) serve as the contract between your business and your website visitors, subscribers and customers who make purchases from your website. 

Terms and conditions can cover a wide variety of topics:your right to use information posted by users on your site, whether and how your intellectual property posted on the site may be used by web visitors, payment terms, warranties and liabilities waived, account management, site security, jurisdiction for any lawsuits arising from their use of your site, etc.

While not legally mandated, these suckers are super important because they give you some control about how things will proceed if a conflict arises with a customer/visitor to your site. One key thing is though, in order to use them to your benefit, the customer must actually know that they have consented to it. 

So, a link to these should be conspicuously posted on the homepage and on every other page of your site. This is known as a “browsewrap agreement.”  If you want to make super certain that all of your visitors are on notice, you can also clickwrap, bubblewrap, or shrinkwrap your agreements (Full disclosure: clipwrap is actually a thing. The last two are lies).

●    Client Service Agreements (CSAs): If you’re also (or solely) operating in the three-dimensional world providing goods and services to humans on an individual basis, you should have each of your clients sign a CSA. These are sort of like the analog version of your Terms & Conditions and they cover many of the same issues regarding settling disputes. 

Moreover, they tell the client exactly how you plan to go about your engagement with them. For example, your CSA should tell your clients exactly what you’ll do if they don’t show up for an appointment, or they pay you late or you have to cancel an appointment that they already paid for. 

●    Disclaimers: If you’re giving advice on your website via blog articles, e-books or any of the other ways you communicate with your audience, or if you are in a highly regulated industry, like providing information about fitness, nutrition, financial advice or legal info, it’s worthwhile to post disclaimers on your website. (We’re actually gonna stick our own at the bottom of this blog post!) Disclaimers are a way to notify people how to use the information on your website and put limitations on the inherent promises, advice and guarantees that may be expressed in some of your website’s content.

These are just a few of the ways that you can be transparent with your customers, endearing them to your brand and protecting yourself legally while you’re at it. Transparency doesn’t have to be scary and, when done right, its benefits to your business can go far beyond just selling more of your stuff.

*In the vein of transparency, we have no idea if Mother Theresa actually said this. These days, it seems like every wise word ever uttered is attributed to her or Buddha. We did get this from a reputable source, however. Surely, quotesabouttransparency.com would not lead us astray.


Rachel Rodgers is a business lawyer, intellectual property strategist, creator of the business law guide Small Business Bodyguard and all-around legal badass. She runs a non-traditional law firm - Rachel Rodgers Law Office P.C. - that has successfully disrupted the legal and made it easy (and darn fun) for innovative companies, startups and entrepreneurs to work with experienced attorneys and get the legal help they need to do the crazy stuff they want to do.


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