When you buy something online, do you read the site’s terms and conditions? Of course not, but why not? The answer to the second question makes a difference whether the site owner can hold you to them as a contract.
One of the big issues in internet law is when a website operator can enforce terms and conditions that no one really reads. Twice recently the Ninth Circuit Court of Appeals has refused to enforce particular ones. In the first case, Donovan Lee bought a background report from Intelius. A year later, he learned that he had unintentionally also subscribed to a “Family Safety Report” that, for $19.95 a month, would tell him if sex offenders moved into his neighborhood. (Washington, where Lee lived, like California, has a website where he could get the same information free). He also learned that not Intelius but Adaptive Marketing, a completely separate company, was charging his credit card every month. Lee responded with a class-action suit against both.
Adaptive Marketing claimed that Lee could not sue it because the terms and conditions on Intelius’s site said that he had to arbitrate. But to get to the terms and conditions, Lee first would have to read the gray print next to the button he clicked, which would direct him to two long paragraphs, written in gray on a beige background. At the end of those paragraphs, he would find a link to a different page with the terms and conditions. Paragraph 10 of the terms and conditions had the part about arbitration. Nowhere did the website even mention Adaptive Marketing, only Intelius.
The court held that Adaptive Marketing was just not a party to the contract, so it could not enforce the arbitration agreement. What’s more, the entire website was so confusing that Lee could hardly have known he was agreeing to buy a Family Safety Report, much less that he was agreeing to arbitrate any dispute. As a result, the terms and conditions were not a contract.
Yesterday, in a second case, the court held that Barnes & Noble’s browsewrap agreement was not a contract. Kevin Nguyen ordered two HP TouchPads advertised at fire-sale prices from B&N. B&N confirmed the sale but, citing unexpected demand, canceled it the next day. Like Lee, Nguyen brought a class action suit, saying that he lost the opportunity to buy the tablets elsewhere. B&N, like Adaptive Marketing, said that its site’s terms and conditions prevented Nguyen from suing.
In both cases, the court suggested that the terms might be enforceable under other circumstances. It only lightly touched on the real problem with them. The whole point of a contract is to allow people signing it to know what to expect. If you don’t read it, it’s your fault if there’s something in it you don’t like. But no one can be expected put the time and energy into reading a website’s terms and conditions before making a small purchase.
A report from Intelius costs between $4.00 and $50.00. Its terms and conditions come to three pages, single spaced, in twelve-point type. No one would pay $4.00 to buy a pen or an ice cream cone from their local store if they first had to read and sign a three-page contract. The only reason that ecommerce companies can require these contracts is because they know their customers will ignore them.