The policy change was originally scheduled to come into effect on February 8, the Facebook-owned company said.
It has clarified that the update does not affect data sharing with Facebook with regard to personal conversations or other profile information and only addresses business chats in the event a user converses with a company's customer service platform through WhatsApp.
"We've heard from so many people how much confusion there is around our recent update. There's been a lot of misinformation causing concern and we want to help everyone understand our principles and the facts," WhatsApp said in a company blog.
"WhatsApp was built on a simple idea: what you share with your friends and family stays between you. This means we will always protect your personal conversations with end-to-end encryption, so that neither WhatsApp nor Facebook can see these private messages. It's why we don't keep logs of who everyone's messaging or calling. We also can't see your shared location and we don't share your contacts with Facebook," it said further.
Asserting that none of that changes, the company said, "The update includes new options people will have to message a business on WhatsApp, and provides further transparency about how we collect and use data. While not everyone shops with a business on WhatsApp today, we think that more people will choose to do so in the future and it's important people are aware of these services. This update does not expand our ability to share data with Facebook."
The company said it was moving back the date on which people will be asked to review and accept the terms.
"No one will have their account suspended or deleted on February 8. We're also going to do a lot more to clear up the misinformation around how privacy and security works on WhatsApp. We'll then go to people gradually to review the policy at their own pace before new business options are available on May 15," it added.
The company released a separate blog post Friday trying to clear up the confusion, and it included a chart that specifies what information is protected when someone uses WhatsApp.
Facebook executives, including Instagram chief Adam Mosseri and WhatsApp head Will Cathcart, also used Twitter to try and clear up the confusion.
Facebook's poor privacy track record, and the fact that WhatsApp has over time turned its sights on monetising the platform for its large international user base, has eroded trust in the chat app, which, in turn, has had the effect of turning a relatively mundane update into a worldwide controversy.
WhatsApp now says it is now going to use the three-month delay to better communicate both the changes in its new policy and its long-standing privacy practices around personal chats, location sharing, and other sensitive data.
"We're now moving back the date on which people will be asked to review and accept the terms," the blog post reads.
The company said no one will be losing access to the app if they didn't agree to the new terms of service agreement that communicated the changes earlier this month.
"We're also going to do a lot more to clear up the misinformation around how privacy and security works on WhatsApp. We'll then go to people gradually to review the policy at their own pace before new business options are available on May 15," it added.