Court sides with internet users against unreasonable user agreements

A U.S. District Court ruling could have wide-ranging and perilous consequences for internet commerce and community sites. Blockbuster (BBI) has been fighting a potential class action suit over its involvement in the now infamous attempt by Facebook to monetize its site by sharing members' purchasing histories. Blockbuster claimed that a clause in its user agreement, which gave it carte blanche to change the agreement with its users as it desired, sheltered it from such suits.

The court ruled otherwise, however, finding that the terms of the contract claiming the company had absolute right to change the agreement at its discretion were "illusory." It also overrode the clause in which members agreed to have any disputes settled by arbitration. Barring a reversal of this judgment, the way has been cleared for a class-action suit, a nightmare scenario for just about any business.

The fact is that the terms of Blockbuster's service are not at all unusual in e-commerce. Virtually every site demands concessions that any reasonable person would dismiss if they could. However, they cannot. Try emailing Google and asking it to amend the standard Google Mail terms for you.

Take a look below at the terms of five sample internet businesses I've gathered, and you'll notice a pattern. The companies reserve the right to change anything any time, with varying efforts to let the user know of the changes. The fact is that users have no alternative to agreeing to these terms except to not participate in the electronic world, and internet services are no longer luxuries or frivolities. They are necessities for those who strive for economic success.

If we users accept these onerous, one-sided terms because the financial gun has been put to our temples, is the agreement really valid? I think the court has a very good reason for concluding that it is not.

Sample terms from five internet sites:

Google Mail
"19.1 Google may make changes to the Universal Terms or Additional Terms from time to time. When these changes are made, Google will make a new copy of the Universal Terms available at http://www.google.com/accounts/TOS?hl=en and any new Additional Terms will be made available to you from within, or through, the affected Services.

19.2 You understand and agree that if you use the Services after the date on which the Universal Terms or Additional Terms have changed, Google will treat your use as acceptance of the updated Universal Terms or Additional Terms."

Goodreads
"We reserve the right to amend this Agreement at any time and without notice. If we do this, we will post the amended Agreement on this page and indicate at the top of the page the date the Agreement was last revised. Your continued use of the Service after any such changes constitutes your acceptance of the new Terms of Use."

Meebo
"Meebo reserves the right, at its sole discretion, to change, modify, update, add, or remove portions of the Terms of Use at any time, with or without notice to you. Please check these Terms of Use periodically for changes. Your continued use of the Services after the posting of any changes to the Terms of Use or after our sending of notice of any changes or updated policy to you means that you have accepted those changes."

Facebook
"We reserve the right, at our sole discretion, to change, modify, add, or delete portions of these Terms of Use at any time without further notice. If we do this, we will post the changes to these Terms of Use on this page and will indicate at the top of this page the date these terms were last revised. Your continued use of the Service or the Site after any such changes constitutes your acceptance of the new Terms of Use."

eBay
"Each of these policies may be changed from time to time. Changes take effect when we post them on the eBay site. When using particular services on our sites, you are subject to any posted policies or rules applicable to services you use through the sites, which may be posted from time to time."


Increase your money and finance knowledge from home

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Asset Allocation

Learn the most important step in structuring an investment portfolio.

View Course »

Add a Comment

*0 / 3000 Character Maximum