Clickthrough Contracts

Online purchases often require the buyer to click on a button stating that he or she agrees to contract terms requested by the seller, similar to “signing on the dotted line” of a printed contract. Sometimes, however, a seller may claim that terms that aren’t as clearly indicated may apply, or may disguise its participation in the deal. A federal case interpreting Washington law helps illustrate how prominently terms should be shown to the buyer to be made part of the deal.

 

The buyer in the case bought, by Internet, a background report based on a compilation of public records (presumably regarding himself) from a seller specializing in compiling information from records. I have occasionally used the same seller to locate information on defendants and witnesses.

 

After giving his credit card number and clicking to purchase, the buyer was directed to a new page that identified only the original seller, discussed the sale of the background report, offered a rebate for completing a two0question survey about the availability of sex offender notifications in his neighborhood, and included a large orange button reading “YES! And show my report.” Much fainter type, at the usual size for most pages, and displaced from the button, indicated that by entering his e-mail and clicking “YES!,” the buyer was agreeing to a free trial of a “Family Safety Report,” which automatically renewed after the trial for a monthly fee. A link to Terms and Conditions was provided.

 

When the buyer eventually noticed that a different company was charging his credit card for the “Family Safety Report” (but no one had ever paid the rebate), he filed a class action against the original seller, probably for violation of Washington’s consumer protection law (the opinion is unclear). The seller then filed a claim to hold the second company responsible for any damages it had to pay out. The second company, in turn, moved to require that the case be arbitrated according the original seller’s terms and conditions. (Sometimes it’s hard to describe what happened without getting complicated.)

 

The trial court held that the buyer bought the monthly Family Safety Report, but did not agree to arbitrate. The second company (selling the Family Safety Report) appealed, and the Court of Appeals ruled that the buyer hadn’t even agreed to buy anything from it, which also meant there was no agreement to arbitrate.

 

The official reason for the court’s reasoning was that the second company was never identified as a party to the contract, so the buyer never knew that he was agreeing to buy anything from them.

 

Fortunately, a change in federal law now prohibits the passing of credit card information from one online seller to another. Each seller has to ask for credit cards separately, so this exact problem won’t happen again, but it is possible that other sellers may try to impose harsh terms in their own contracts without adequately warning buyers, a question the court didn’t answer but stated its skepticism regarding..

 

The court suggested that even if the original seller was selling the Family Safety Report, it might not have approved the sale. Washington, like most states, requires an agreement to a contract be demonstrated by words or conduct that an outsider, viewing matters objectively, would say shows consent. In consumer situations, the rule in most states is that terms that significantly change what was negotiated or expected should be presented prominently. In this case, the orange button, on a page that confirmed purchase of a background report, appeared to suggest that “And show my report” referred to the background report, not a new Family Safety Report. The court questioned, without actually deciding the issue, whether the buyer actually agreed to buy the Family Safety Report.

 

Because the court didn’t need to decide the issue of exactly what the buyer seemed to be buying, it’s not clear whether the layout (which can be seen at the last page of http://cdn.ca9.uscourts.gov/datastore/opinions/2013/12/16/11-35810.pdf) was confusing enough that a buyer might not realized he or she was buying the Family Safety Report. If, however, you think you are being charged for something you didn’t agree to, try to get a copy of the pages you clicked through so that a lawyer can look at them and give you an opinion.

 

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