Website and app owners beware: Your Terms of Service may no longer pass court muster

October 31, 2012|Gus G. Sentementes

This caught my eye this morning: Zappos, the online shoe and clothing retailer, lost a court battle in trying to defend its Terms of Service language from lawyers who are suing the company for losing the online data of 24 million customers.

Most businesses who operate websites and even mobile apps have what's called a "Terms of Service" contract that explicitly states the legal relationship between the company and the user. In most cases, the TOS will require users to engage in less-costly arbitration before filing a lawsuit, should a problem arise.

But the problem with Zappos' TOS -- which is still available here -- is that the website visitor isn't required to click on it, thus signifying her agreement to a legally binding contract. Instead, Zappos has followed Internet norm, which is essentially that if user visits a site, than she is unilaterally bound to the TOS that can be found somewhere on the site, whether or not she actually reads them.

Eric Goldman, a professor of law at Santa Clara University School of Law, in California, blogged extensivly on this, and his analysis is an eye-opener for anyone who's running a website with a fast-and-loose TOS. 

The upshot, per Goldman: Judges would rather see websites explicitly confirm with users that they have had a chance to see the TOS, rather than just putting it in small print at the bottom of a website.

Technically, this is no big deal to implement within a website's architecture -- dead simple, in fact. But wow: Zappos is now in a world of hurt, as a poorly implemented TOS has increased its legal exposure significantly, as Goldman notes.



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