Changing Terms of Service? Be Ready For A Class Action LawsuitWritten by Mark Rasch
Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today is a lawyer in Bethesda, Md., specializing in privacy and security law.
Think you have complete control of the terms of service (TOS) of your website? As a retailer, you probably assume that you can dictate terms to customers, especially about any services you offer them besides selling them merchandise. And when photo-sharing website Instagram changed its terms of service in mid-January of this year, it probably didn’t expect too many people to even notice. Those who did might be displeased with the changes, and might abandon the service or go to another one. But what Instagram should have expected was a class-action lawsuit.
And just such a suit was filed on July 16 in California Superior Court in San Francisco.
Instagram also changed its limitations on liability to be more favorable to themselves, and grant themselves additional remedies. You really didn’t expect changes that would favor the consumer, did you?
The relationship between websites and their users is, for the most part, a creature of contract law. While the underlying business being promoted may be regulated, and there may be laws on marketing and promotion (e.g, deceptive trade practice or lawyer advertising rules), issues like ownership of intellectual property, privacy rights, rights to exploit content, liability, remedies, venue and jurisdiction are “negotiated” by contract.
Problem is, they aren’t really ever negotiated. They are dictated by the website operator, who frequently reserves the right to change these terms at will, simply by, well, changing them. In many cases, it is the consumer’s obligation to check the website to find out that the terms have changed.
Typically, you “agree” to a contract by either signing the contract (clicking “I agree”) or engaging in conduct which demonstrates assent (“by using the service you agree to these terms”). But after you have already agreed to a contract, and the other party, dissatisfied with the agreement they have negotiated (especially here when they wrote it), wants to change it, this is typically called a “novation” to the contract. For a “novation” to be effective there has to be some consideration for the change—essentially a new contract.
Ordinarily, website operators get around this requirement in several ways. First, they write in the original contract that they can change the terms at any time with or without notice. It’s like Big Jule in Guys and Dolls, who plays craps with blank dice: “I had the spots taken off for luck. But I remember where the spots formerly were.” A contract which can be changed at any time by one party typically is not a “binding contract.” But somehow courts have let website operators get away with this.