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Judges: No changing online contracts without warning

updated 03:45 pm EDT, Mon July 30, 2007

Online contract warnings

Businesses cannot make online changes to a contract without informing their customers, according to a ruling by the Ninth Circuit of the US Court of Appeals. The issue stems from the case of Joe Douglas, a customer of the phone company Talk America, which recently merged with Cavalier Telephone. Douglas was initially a customer of America Online, part of which was acquired by Talk, which in turn provided phone service to former AOL subscribers. Following the acquisition, Talk altered its contracts, raising prices and inserting legal clauses protecting it from the likes of class-action lawsuits.

This information was only posted on the Talk website however, and because Douglas was billed automatically via credit card, he claims he was unaware for four years that anything had changed. He eventually filed suit in California, but was forced into arbitration by Talk and the original federal judge for the case.

The Court of Appeals now says that by definition, a contract is an agreement between two parties, and so companies must explicitly give customers an option to accept or decline the terms. "Even if Douglas had visited Talk America's Web site to pay his bills, he would have had no reason to look at the contract posted there," the ruling reads. Douglas is henceforth free to file a class-action suit against Talk, although no move has been announced as of yet. [via ComputerWorld]



By Electronista Staff
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