Mountain Law: Website use agreements: click at your own risk (column)
Are consumers bound by website use agreements? Let’s discuss some general principles in this area of law and explain why these agreements matter.
Website use agreements can have real consequences. For one example, these agreements often require arbitration of disputes rather than going to court and also often prohibit class actions by users against the website company, meaning that every arbitration has to be conducted separately. The combination of these two provisions is essentially that website companies are immune from lawsuits because every case must be expensively arbitrated, and numerous small claims cannot be joined together to make a large class action claim that is worth pursuing. This outcome has been supported through a series of controversial decisions by the United States Supreme Court.
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Another example is illustrated by the famous “KlearGear.com” case, in which the website use agreement stated that the consumer agreed not to disparage the website company, and that any violation would entitle the company to $3,500. A consumer had a difficult time with customer service after making a purchase on the website and ultimately posted a bad review online. This prompted the company to report to the credit bureaus that the consumer had an outstanding debt for $3,500. The consumer sued the company and obtained a default judgment, but the judgment was apparently never collected, and the consumer’s credit was damaged. The enforceability of agreements not to disparage of the sort at issue in the case is a hot issue that has not yet been conclusively decided.
In sum, website use agreements can be enforceable under certain circumstances and have real consequences. Consumers should be wary of them.
Noah Klug is owner of The Klug Law Firm, LLC, in Summit County, Colorado. He may be reached at (970) 468-4953 or Noah@TheKlugLawFirm.com
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