Are Your Terms of Service Legal?

I don’t usually go here, but this is an important issue for any web site operator that has terms of service that they want visitors or customers to be bound by.

Courts continue to rule against companies, even big companies, for failing to follow basic rules that the courts have laid out time and again.

The important issue is this.  If you do not follow these rules and you try to enforce provisions that are in the terms of service, the courts will likely rule against you.

Even given that, big companies seem to fail way too often.  Small companies probably fail more often but don’t make the news.

Here is today’s example.

Since I don’t even play a lawyer on the Internet, this commentary comes from Eric Goldman.  Eric is a well known (in Internet blogging circles) professor of law at the Santa Clara University School of Law.  Read the rest of Eric’s bio here.

The loser in this case is Redbox.

The person suing is named Wilson.  Wilson said that Redbox was violating the TCPA law by sending her unwanted texts.

Redbox said that she couldn’t sue because in the terms of service it says that arbitration, which is usually much more favorable to businesses than consumers, was mandatory.

Therefore, the first thing the court had to determine was whether she could even sue at all.

Wilson had been a customer since 2007 and she had rented over 100 movies.

In November 2016, Redbox added a mandatory arbitration clause to their “terms of use”.

The court said that they didn’t “form” the contract correctly so the terms are not enforceable.

There were three possible places they could have done things right – the email announcing the change in 2016, on the website when she rented a movie or at the kiosk.  According the court, they did none of these.

I am going to spare you most of the gory details, but if you run a website that assumes that visitors are bound by your terms of service, I suggest that you or your lawyer read Eric’s blog in detail and make sure that you comply.

The simple version of the problem is that many companies try to hide the fact that users are agreeing to a contract for fear they might read the damn thing.  That is great when it comes to not losing customers, but it doesn’t help much when it comes to not losing lawsuits.

Here is just a sample of the details —

On the kiosk, there is a small box in a bottom corner that says terms & privacy and a much bigger box in the middle of the screen that says pay now.  This screen design hasn’t changed since 2012, long before the change in the terms.

What the court complains about (see screen below), is that a user can pay without even looking at the terms & privacy, never mind agreeing to it.

They intentionally made the text smaller for the terms box to draw attention to almost any other box on the screen. and it is visually separated from the pay box by two other boxes, sign in and add promos.

The court says that because the terms box seems to visually be in the section of the screen labelled “don’t miss your perks!” that a user might think that anything below that is related to your perks.

The website login page fails for similar reasons.  See that screen below here.

Here the terms are slightly contrasted (white instead of gray) but still in tiny print, far away from the sign in button and clearly (and intentionally) much less conspicuous than the sign in button.

Note on this page that FORGET PASSWORD AND JOIN REDBOX PERKS are much bigger and more obvious than that tiny little text in a mass of blather at the bottom of the screen where no one looks.

The simple thing to do here is to require the user to manually check a box (do not pre-check it) agreeing to the terms of service, with a second button to go to the next screen, seems pretty simple and you see a lot of web sites do that.

Do not be lulled into a false sense of security that the courts will rule in your favor.  They might not and then where will you be?

If this is an area that you are responsible for, I suggest you read Professor Goldman’s entire column for more information.  It can be found here.

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