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« What Business Leaders Need To Know About Employee Privacy | Main | Revisiting Two Viewpoints Of Outsourcing Vendor Security »

Click Wrap Contracts: Creating Them And Agreeing To Them

There was an interesting article in this week's issue of Privacy and Security Law, "Clickwrap Notifying Software Recipients Of Pop-Up Installation Is Valid, Enforceable" (a subscription site).

Basically, Direct Revenue, an advertising company that produces software that delivers ads to Internet users' computers, lures customers to view ads by making popular screen savers or games free of charge. When the free software is delivered to the Internet user, the applications also install advertising software that generates pop-up ads.

After receiving many consumer compliants, in 2006 the New York Attorney General's office had charged that Direct Revenue was practicing deceptive business practices, trespass and false advertising.

However, the New York Supreme Court found on March 20, 2008, that Direct Revenue was NOT engaged in deceptive business practices, or any of the other charges.

Why? Because the investigators for the case conducted tests of the web sites that distributed Direct Revenue's advertising software and they found that Direct Revenue...

1) Provided a license agreement to the end user that indicated the software would be installed on the end-user's computer.
2) Installed the advertising software only after the end user explicitly clicked on a "yes" button to consent to the terms of the end user license agreement, which was hyperlinked to the page.
3) The end user license agreement indicated the software would collect information on users' online activities to display ads, and specifically indicated that advertisements would be delivered in the form of pop-up ads.
4) The end user license agreement provided instructions for uninstalling the software, and contained a disclaimer of warranty.


In New York, as well as in many other locations, including non-US locations, clickwrap agreements are enforceable when the consumer has been given what is considered a sufficient opportunity to read the online contract and then accepts the contract terms.

These are the Notice and Consent requirements within most data protection laws throughout the world.

Because the online contract present a hyperlink specifically referring to the agreement, and the end user had to explicitly and actively accept the terms by clicking "yes," it was not considered a deceptive practice, false advertising, or trespass.

This brings up issues from both sides of the topic:

1) What kinds of click wrap contracts do your organization present to your web site visitors? Do they meet the notice and consent requirements of all the locations where you have potential customers and consumers?

2) What kind of click wrap contracts do your personnel agree to when visiting web sites from your company's network? Are they agreeing to things that could impact the performance of your network? Or, are they delivering monitoring technologies onto your network?

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Rebecca Herold's Bio:

Rebecca Herold,CISSP, CIPP, CISM, CISA, FLMI, has been providing information security, privacy and regulatory assistance and services to organizations from a wide range of industries for over 18 years. Rebecca was instrumental in building the information security and privacy program while at Principal Financial Group, which was awarded the CSI Information Security Program of the Year Award in 1998. IT Security ranked Rebecca as one of the top 59 IT security influencers, and Computerworld put Rebecca their list of the 25 top privacy experts and on their list of the 9 best privacy consulting firms. Rebecca has been CPO for two consulting organizations, and has had her own information privacy, security and compliance business since 2004. Rebecca has written chapters for several books, dozens of articles, and has been writing a monthly privacy column for the CSI Alert newsletter since the beginning of 2001, and is working on her 11th book. Some of her other books include The Privacy Papers, Managing an Information Security and Privacy Awareness and Training Program, The Definitive Guide to Security Inside the Perimeter (Realtime Publishers), The Shortcut Guide to Improving IT Service Support through ITIL (Realtime Publishers), and The Practical Guide to HIPAA Privacy and Security Compliance. In addition, Rebecca is the leader of The Realtime IT Compliance Community where she posts to her IT Compliance weblog. You can contact Rebecca at: rebecca_herold@realtimepublishers.net.