Creating Ethical and Binding Website Terms and Conditions

Often websites have terms and conditions which provide details about site usage, shipping terms, or information about charges that may be incurred through usage of the site. Many organizations use these terms and conditions to not only provide information to their website users, but also to protect themselves legally. However, a legal case brought before the U.S. District Court shows that the courts may be looking to protect consumer rights.

The Lawsuit Against Terms and Conditions

Terms and conditions or user agreement licenses are not new to the world of web marketing and neither is the temptation for organizations to abuse them. Many companies bury important details in the middle of a lengthy terms and condition section written in legal terminology. Some will require the user to check a box or click a button to signal their acceptance; however, many just list their terms and conditions without requiring users to consent. The belief has always been that just having terms and conditions spelled out were sufficient for holding the customer to these terms.

Overstock.com has a terms and conditions page on their website that does not require the customer to consent to these terms before purchasing products on the site. This is at the heart of the current class action lawsuit against Overstock.com.

In Hines V. Overstock.com, a class action lawsuit was brought against Overstock.com because a customer was charged a $30 restocking fee for merchandise that was purchased and then returned to the online retailer. Overstock.com sought to have the lawsuit dismissed because they argue the restocking fee was clearly explained in the terms and conditions. Furthermore, the terms and conditions also state that entering the website signifies the user’s acceptance of the terms and conditions.

The federal judge in the case refused to dismiss the case and the lawsuit will now move forward.

Creating Binding Terms and Conditions

Essentially, for the terms and conditions to be binding, they have to meet the reasonable person standard. That is that a reasonable person would have known that the terms and conditions exist on the site. In the case of Overstock.com the judge ruled that since the link to the terms and conditions page were in small print at the bottom of the page (below the fold in newspaper terms), and because the user was not required to read or accept the terms and conditions before making a purchase that this test was not met. Therefore, according to the court, the terms and conditions were not binding.

This decision demonstrates that terms and conditions need to be prominently displayed on the website and that some sort of acceptance by the customer needs to be completed before the terms become binding.

Ethics and Terms and Conditions

Beyond just the legal ramifications, organizations need to understand the importance of a long-term perspective in marketing. By hiding fees or other terms for usage of the website in lengthy and hard to find terms and conditions, companies may turn a quick profit but damage the long-term consumer trust in eCommerce.

Rush Kidder in his book How Good People Make Tough Decisions defines a moral temptation as a right vs. wrong dilemma. Misleading or hiding fees from consumers and then claiming legal protection because the website had a terms and conditions page is wrong and falls into Kidder’s definition of a moral temptation.

Assuring fair policies and asking site visitors to accept the terms is a good start for treating customers ethically. However, many customers never read the terms and conditions, even when asked to accept them. Therefore it is a good idea to list any fees, shipping terms, or other terms in multiple locations on the site. This prominent display of all necessary information will ultimately help to reduce legal threats and increase customer satisfaction.

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