Website legal agreements, such as Term of Use or Terms of Service, typically need to be revised and updated from time to time in order to add new provisions or adapt to new laws. Often times, a website operator will simply publish a change to those terms without thinking through the update process. This can lead to disaster - i.e. - to the updated terms being considered unenforceable in the event of a lawsuit. In the case of Rodman v. Safeway Inc. this resulted in a 42 million dollar judgement against Safeway...ouch. Read along to understand what happened to Safeway and how you can prevent this same thing from happening to your business.
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 new customer registers as a user of Safeway, they are required to click a box that states "Check this box if you agree to the Terms and Conditions." BRAVO - that qualifies as a clickwrap best practice! But Safeway amended the Terms and Conditions in November of 2011 in an attempt to notify customers of differences in the pricing of products between its physical stores (shoes and shirts) and the delivery service. The original Terms and Conditions for the delivery service stated that the prices were the same...the new version did not.
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. This oversight resulted in a class action lawsuit against Safeway for grocery overpricing, in which 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.
Updating terms is a normal practice, but it's imperative that you have a proven system in place to manage versioning. This case makes it blatantly obvious that simply changing website legal terms, then crossing your fingers that the changes hold up, won't work. Here are some best practices to consider when updating your terms of service.
If implementing this type of solution sounds challenging or time consuming to you. PactSafe can help. We're experts in managing website legal agreements, capturing assent and helping companies prove acceptance of their online agreements