Court Rules Website Terms of Service Agreement Completely Invalid

another random user sends this excerpt from Business Insider: "In January, hackers got hold of 24 million Zappos customers' email addresses and other personal information. Some of those customers have been suing Zappos, an online shoes and clothing retailer that's owned by Amazon.com. Zappos wants the matter to go into arbitration, citing its terms of service. The problem: A federal court just ruled that agreement completely invalid. So Zappos will have to go to court—or more likely settle to avoid those legal costs. Here's how Zappos screwed up, according to Eric Goldman, a law professor and director of Santa Clara University's High Tech Law Institute: It put a link to its terms of service on its website, but didn't force customers to click through to it."

Comments

Stupid.

[multiben]

The whole TOS crap needs to change. If Zappos had forced people through the TOS page not one single extra person would have read it. It's just an arse covering law with no benefit to customers or vendors.

Re:Stupid.

[debrain]

But it does benefit lawyers. Lawyers hate arbitration because you don't need a lawyer to arbitrate. Lawyers love class action suits because pretty much all the damages go directly to them, with the customers just getting a coupon for half off their next purchase from the company the screwed them.

This is nonsense. I've been a lawyer, arbitrator and class action litigator for nearly a decade now.

Let's break down your post.

First, lawyers do fine with or without arbitration clauses; I honestly don't care what the process is. Arbitration clauses do tend to increase the cost of litigation to individual litigants for several reasons, including:

1. Arbitrations are private; a finding of liability has no impact on subsequent cases, unlike a finding in Court;

2. Arbitration is generally more expensive than litigation, for several reasons including the obligation of the complainant to pay the arbitrator fees, contrary judges who are paid by taxpayers;

3. Arbitrations, except for the rare multi-party arbitrations, do not permit the resolution of common issues for all similarly situated litigants, unlike class actions.

All of the above discourage litigation against big, bad clients because the big bad clients increase the cost and risk of seeking compensation for wrongs. I have noted a trend across jurisdictions that those where the perceived costs of seeking compensation for wrongs is subject to high procedural barriers correlates with the pervasiveness of apathy and helplessness.

Class proceedings reduce (and often eliminate) risk to individual litigants.

As for class arbitration, the rules of arbitration generally do not permit class proceedings. However, there is nothing stopping individuals from agreeing to individual arbitrations heard and determined concurrently by way of contract. A properly crafted agreement would likely be as binding as an award from individual arbitration, and have many of the economies of scale inherent to class proceedings. This is rare because it would require the consent of a defendant, who has every financial (and public relations) incentive to increase the cost of and risk to every claimant.

As for lawyers receiving most of the damages, that is an entire topic to itself. Class proceedings exist for three purposes: (1) decrease the cost of individual litigation; (2) increase efficiency of the court system by determining common issues together; and (3) correct bad behaviour. On point one, it is almost always true, in my experience, that class proceedings are more cost effective than individual litigation --- you are almost certainly going to get more at the end of the day by being a member of a class proceeding than by hiring a lawyer to proceed on your behalf directly. All class proceedings in the world, as far as I know, give you the opportunity to opt out of the class and pursue your litigation on your own, in any case, so if you are quite so against the class proceeding benefitting the lawyers, you can bring pursue the litigation by yourself. It bears mentioning that many class proceedings are also highly speculative, and higher risk merits higher rewards - otherwise the competent lawyers would find something else to do with their time and many valid complaints would pass under the radar.

On the second point, arbitrations are typically significantly more expensive than litigation in court. You have to pay the arbitrator and due to the faster timelines it often proceeds to an actual determination more often, in my experience, than litigation (as litigation is often painfully slow and settlement is encouraged by way of process designed to be challenging and expensive - to encourage settlement).

Finally, correction of bad behaviour is a worthwhile goal in and of itself, and even if the lawyers achieved no financial compensation for the members of the class, it is worthwhile to reward those pursuing and advancing corrective behaviour through the adversarial process.

Which is all to say: Your post is not very well informed, and I would encourage you to bear the above in mind before posting similar nonsense in the future.

Re:Next up... a Quiz based on small print...

[Hatta]

Great idea. Can we get Congress to undergo the same when they vote on a bill too?

Re:Changes incoming

[smellotron]

You only get the advertised sale price if you use their "club card" which has your personal identifying information plus now your spending habits, etc.

Whenever I signed up for a club card, it was pretty clear to me that I was receiving a discount in payment for my spending profile. With Costco or other "membership-only" stores, this is built in; and the membership fee is a straightforward economic decision (do your marginal savings relative to a non-membership big box store outweigh the membership cost?) In either case, I am being compensated for the harvesting of my information, and there is no personal risk involved. What's being presented in the article—forced binding arbitration in lieu of actual legal recourse—is an entirely different situation, because it amounts to a risk transfer (company reduces legal costs, customers who are "wronged" lose the recourse to recover losses). It's very one-sided, and I find it unbelievable that the judicial system would go along with this idea.