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30 million reasons to be careful updating website Terms and Conditions

Sep 2, 2015 11:00:33 AM

Earlier this year we wrote about the Safeway class action lawsuit, and how it is a perfect example of why updating / modifying your website terms and conditions should be done in a methodical way. To recap:

  • Safeway operates an online grocery delivery service on its website, safeway.com (because, you know, grocery stores require shoes and shirts – better to just have groceries delivered).  When a customer registers, they click a box that states “Check this box if you agree to the Terms and Conditions.”  BRAVO – that qualifies as a clickwrap best practice
  • After that, though, customers could place orders without any requirement that they review or further accept the Terms and Conditions.  Safeway amended them in November of 2011 in an attempt to notify customers of differences in pricing of products between its physical stores (shoes and shirts) and the delivery service; the original terms stated that the prices were the same.
  • Unfortunately for Safeway, they never gave conspicuous notice that changes had been made to the Terms and Conditions at the time those changes were made. Because of that, a federal judge held that the changes to the Terms and Conditions represent an offer to which customers never expressed assent, and that therefore customers were not bound by those changes.  NOT a clickwrap best practice!   The judge opined [emphasis added]:

Safeway is best positioned to make sure customers are aware of changes that Safeway has made to its contract with Class Members. After making a change, Safeway can take any number of actions to alert users that the Special Terms they agreed to at registration have been altered. For instance, Safeway could ask customers to click to indicate that they agree to the new Special Terms or send all existing safeway.com customers an email in order to ensure that every consumer is aware of a change in the Special Terms prior to making a purchase. When Safeway changed the Special Terms on November 15, 2011, it opted to do neither.

The result:  Safeway must pay out $30,900,000 in damages.

[UPDATE - The damages actually amount to $42,000,000! 

OUCH!!

As we stated before, this case makes it blatantly obvious that simply changing website legal terms, then crossing your fingers that the changes hold up, doesn’t work. Its critical to least put visitors on notice regarding the changes, although the better practice would be to present those changes for acceptance via some clickable transaction.

Make your contract provisions enforceable

Topics: Clickwraps

Brian Powers

Written by Brian Powers

PactSafe CEO & Founder

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