A lot of people are afraid of contracts.
That’s because they are approaching the concept from the wrong perspective.
I often hear from people who are worried that a formal contract with scare off someone they’re looking to work with, because forcing someone to sign a document shows you don’t trust them.
It’s a mistake to allow those worries to convince you that you don’t really need to get whatever it is in writing.
True, not everything needs a 20-page agreement filled with legalese.
But every agreement that matters needs to be documented.
Think about it like this: contracts aren’t really about trust at all.
You build trust through your reputation and your work; not through your documents.
My friend Andy Frisella summed up this issue nicely in a recent episode of his podcast (I’m paraphrasing):
That fear of sending contracts isn’t an issue of trust but communication.
When you present that agreement to the other party, it should be with the intent that it will never need to be looked at again, unless an issue cannot be resolved through a conversation.
And if you get to that point, the contract is like an insurance policy—it’s there to help everyone navigate the impasse and get through it.
Of course, you should always make sure that you understand and are comfortable (or at least willing to live with) everything in a contract presented to you before you sign it.
If something seems unfair, or even if you just aren’t completely sure, have it reviewed by someone with experience who will look out for you.
But don’t be afraid of written contracts—use them to help protect your business so that you have an easier time building that trust.
On Monday, Meta sued a company called SocialData, which provides account metrics and other social media analytics data to its users.
Specifically, SocialData provided information about Instagram accounts, including username, follower and like count, post count, verification status, and demographic analysis of the account’s audience.
Meta alleges SocialData used thousands of automated bot IG accounts to collect and aggregate (i.e., scrape) the data and sold that data in the form of “Audience Data” reports.
What’s the problem?
For one thing, everyone who creates an IG account agrees to the Instagram Terms of Use, which prohibit “collecting information in an automated way.”
So, one of the claims against SocialData is for breach of contract—violating the Terms of Use.
Meta also asserts a claim for violation of California’s Comprehensive Computer Data Access and Fraud Act (the CDAFA), which is California’s version of the federal Computer Fraud and Abuse Act.
The relevant part of the CDAFA makes it unlawful to “knowingly access and without permission … make use of any data from a … computer system.”
Here, Meta says it sent SocialData a cease and desist letter explaining the violations and demanding that Social Data stop.
But SocialData responded saying it believed scraping data was “a fundamental right” and continued the alleged operations.
So, Meta says, SocialData knew it was accessing the IG computer system without permission, in violation of the CDAFA.
You might be wondering, “what about that LinkedIn decision that said scraping data is legal?”
SocialData said the same thing in response to the cease and desist letter.
It’s true that in hiQ Labs v. LinkedIn, the Ninth Circuit ruled that automated scraping of publicly accessible data probably does not violate the federal version of CDAFA.
But the U.S. Supreme Court “vacated” that ruling (meaning it has no effect) earlier this year, so it’s back before the Ninth Circuit for further review.
Meta’s pending lawsuits against SocialData and other analytics services (like BrandTotal) likely explain why services like IGBlade vanished in recent months.
There are rules about offering a “money-back guarantee” that brands and their customers should know.
The FTC’s rule is that a seller can use the terms “satisfaction guarantee,” “money back guarantee,” or similar language only if it “refunds the full purchase price of the advertised product at the purchaser’s request.”
The rule also requires that any “limitations or conditions that apply” need to be presented “with such clarity and prominence as will be noticed and understood” by customers.
In other words, if the guarantee doesn’t mean a complete, no-questions-asked refund, then the conditions need to be explained clearly enough that no one could miss it.
So, if you advertise a “60-day money back guarantee,” but the customer has to pay shipping, submit some kind of proof about using the product, or other condition, that needs to be set out clearly at the same time as the guarantee offer is presented.
A real-life example:
Last year, the FTC reached a $22M settlement with a manufacturer of a pain relief device.
Among other problems, the lawsuit alleged that the seller offered a “risk-free” and “money-back” guarantee, but that shipping and handling was not refundable.
The seller only disclosed that limitation in separate links on their website and at the bottom of invoices.
They also sometimes required “burdensome tasks” to obtain a refund, including proof of completing a treatment regimen—also only disclosed in separate links and on invoices.
Paying attention to your guarantee language up front can save a lot of trouble later.