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One-Third of Top Websites Restrict Customers' Right to Sue [National Iraqi News Agency (Iraq)]
[October 24, 2014]

One-Third of Top Websites Restrict Customers' Right to Sue [National Iraqi News Agency (Iraq)]


(National Iraqi News Agency (Iraq) Via Acquire Media NewsEdge) Walk into the grocery store, and you can sue if a clumsy clerk drops a box on your head. But what happens if a website leaks your personal data? Or if an online retailer misleads you about the cost of a purchase? Depending on the site you're visiting, your legal rights are murkier.



That's because, tucked into the dense legalese of their terms-of-service rules, many of the Internet's most popular sites have inserted language that forbids users from suing if something goes wrong, an analysis by The Upshot has found. In some cases, you don't even have to pretend to read a contract and click an "I accept" box for the restrictions to kick in.

These legal provisions, known as forced arbitration clauses and class-action ban clauses, have long been included in complex offline contracts like car leases. But their presence online — in documents people rarely see, let alone read — offers a new twist, with consequences for consumers that are still being sorted out by the courts. As more of everyday life moves online, companies are effectively creating rules that experts and activists say tilt the playing field away from the consumer.


After General Mills faced an uproar this year for adding these clauses (it later removed them), The Upshot analyzed terms of service for the top 200 online stores, as ranked by the trade publication Internet Retailer, to see which carried similar provisions. Of those 200, 68 contained some flavor of these restrictions. A similar proportion of the top 500 most-visited websites in the United States also included at least one of the clauses.

The companies occupy all corners of the web: e-commerce giants like Amazon and eBay; popular dating sites, including Match.com and OKCupid; media companies like The Wall Street Journal and BuzzFeed (though not The New York Times Company); the online storage startup Dropbox; even brick-and-mortar retailers like Target and Domino's Pizza, whose restrictions would apply if you purchased items on their websites, but not in their physical stores.

A few big, familiar web companies like Facebook and Google stand out by not limiting whether their users can sue.

A class-action lawsuit still underway involving the online travel agency Travelocity shows how effective the user agreements can be for companies in limiting consumers' claims against them. The suit, which has been dismissed once and may have a difficult road ahead of it, alleges that several online travel agencies effectively conspired to fix hotel room prices (which the defendants, including Travelocity, deny). But lawyers for Travelocity successfully argued that people who used the site after the company added both types of clauses to its terms of service (which it did in 2010) couldn't participate in the suit and would have to resolve their claims one by one in arbitration. So far, none have.

Travelocity used a type of online agreement called "clickwrap," in which website visitors must click a button or check a box to say that they agree to the terms when they create an account or make a purchase. But many websites instead use "browsewrap" agreements, in which, somewhere on the page, there's only a link to the terms, which say visitors are allowed to use the site only if they agree to those terms of service. The courts have reacted unevenly to such terms. In 2012, the online retailer Zappos tried to block a suit over a personal data leak by citing its browsewrap-style user agreement, but a Federal District Court in Nevada ruled that the link to its terms, located near the bottom of each page on the site, wasn't prominent enough for users to have noticed. Today, the link is more conspicuous: highlighted in blue, it appears directly beneath the site's login form.

But other browsewrap terms have held up in court.

"Courts have been very reluctant to say that browsewrap is not enforceable," said Nancy S. Kim, a professor at the California Western School of Law and the author of a book about online contracts.

When courts decide whether a website's terms can be enforced, they look for two things, Ms. Kim said: First, whether the user had notice of the site's rules; and second, whether the user signaled his or her agreement to those rules. Courts have ruled that simply continuing to use the site signals agreement. When browsewrap agreements have been thrown out, as in the Zappos case, courts have said that the site's link to the terms wasn't displayed prominently enough to assume visitors had noticed it.

Whether class-action ban and forced arbitration clauses are fair is a long-running argument. Consumer advocates argue that by including them within their terms of service, companies are robbing consumers of the ability to ensure they're treated fairly.

Class-action lawsuits can focus small but widespread complaints into a formidable legal challenge. And large penalties from class-action suits can deter other companies from committing similar misdeeds, consumer advocates also argue.

"The main point of a class-action ban is to exempt the corporation from consumer protection laws," said F. Paul Bland, a lawyer and the executive director of Public Justic, a nonprofit consumer advocacy group.

For their part, companies fear quixotic, expensive and what they see as frivolous class-action claims, motivating them to prohibit their users from participating.

"It's no secret that some claims have very little merit," said Chris S. Coutroulis, an attorney with law firm Carlton Fields Jorden Burt , but "when a case is brought as a class, the potential exposure changes." Being forced to settle complaints in arbitration, which is presided over by a private lawyer rather than a judge, leaves consumers with little recourse if they disagree with the ruling. After the case is over, arbitration clauses sometimes also ban consumers from discussing the case publicly, even if they won, unlike in court, where case records are almost always public.

Lawyers who specialize in consumer complaints cite some of these differences in explaining why they refuse to take cases involving these clauses, according to a survey by the National Association of Consumer Advocates.

Companies that use arbitration clauses argue that they can often be faster and less complicated for consumers than protracted lawsuits. Following American Arbitration Association guidelines, this provides for a consumer-centric approach to dispute resolution that is both faster and more budget-friendly for consumers than traditional courts," Travelocity said in a statement.

Arbitration cases involving consumers are rare, and most involve banks and car dealerships, not websites. eBay is one exception: since 2010 , users' disputes with the auction site have been brought to arbitration nine times, according to case summaries published by the two major arbitration administration organizations.

CONTINUE READING THE MAIN STORY WRITE A COMMENT Clauses banning class actions and requiring arbitration are legal, though it was only in 2011 that the Supreme Court ruled that companies could legally prohibit class actions nationwide in consumer contracts. The next year, the number of large companies including class-action bans in their contracts had more than doubled, according to a survey conducted by Carlton Fields Jorden Burt.

These clauses aren't the only ways that website terms of service can limit customers' rights. A few businesses have banned their customers from posting negative reviews on websites like Yelp and fining them if they do. A new California law forbids this practice, inspiring a similar bill to ban them nationwide.

Consumer protection laws can't be totally gutted by website terms: Contract clauses can't restrict regulatory agencies from suing to enforce consumer protection laws. In July, the Federal Trade Commission sued Amazon over purchases in mobile apps made by children for which Amazon hadn't gotten the parents' approval. Thousands of families complained to Amazon about millions of dollars in unauthorized charges, the F.T.C.'s lawsuit says – thousands who may have been deterred by Amazon's terms of service from trying to get their money back on their own.

All rights are reserved for National Iraqi News Agency / NINA (c) 2014 Provided by SyndiGate Media Inc. (Syndigate.info).

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