Berry v. Webloyalty.com, Inc., 2011 WL 1375665 (S.D. Cal.)
Berry sued Webloyalty over his enrollment into a membership program on the internet. He bought tickets from MovieTickets.com and saw an ad to save $10 on his next purchase. He clicked on the ad and provided his email address, but didn’t read the other information. He started getting monthly charges of $12/month. (Has anyone ever actually saved money using this kind of service?) He alleged that the enrollment was deceptive and misleading.
The court, however, found that the disclosures were prominent enough that no reasonable consumer could have been fooled by them (essentially deeming all the people who feel cheated by programs of this type unreasonable).
Another case, Keithly v. Intelius, Inc., No. 09–1485, 2011 U.S. Dist. LEXIS 16861 (W.D.Wa. Feb. 8, 2011), was not to the contrary. In Keithly, in order to reach the enrollment page, the consumer clicked on a button that said “Confirm the Purchase and Show my Report” rather than clicking on a coupon offer. Moreover, there were not as many disclosures in close proximity to the offer graphics. And the only text above the box where the consumer enters his email was “Please type in your email address below.”
Berry took three affirmative steps to accept the terms of the club membership—he entered his email twice and clicked the “YES” button.
This defeated all the claims: misrepresentation, unfair competition, false advertising, violation of the Electronic Funds Transfer Act, violated the Electronic Communications Privacy Act, civil theft, unjust enrichment, money had and received, conversion, negligence, and invasion of privacy.
With respect to the UCL, Berry also argued that the practice was unfair because the injury caused outweighed any benefit to consumers. “Unfair” is ill-defined in the context of consumer plaintiffs under the UCL, but generally means a practice that undermines a legislatively declared policy or threatens competition, or a practice that has an impact on its alleged victim that outweighs the reasons, justifications, and motives of the alleged wrongdoer. The court concluded that the complaint contained only cursory allegations insufficient to meet this standard.
What I think is missing here is a recognition that, as the FTC has long told advertisers, too much information is as bad as too little. By plastering the page with repetitive chunks of text that en-courages scrolling past, the advertiser decreases the chance that the consumer will actually read and understand the disclosures, especially when the page also has distractors like the logos of famous companies. Especially when the consumer doesn’t have to re-enter his or her credit card information, this layout is a recipe for consumers failing to understand the actual terms. If the defendants were really interested in providing full information, the first interaction would be clear and limited: if you click yes you’re entering a new program, for which you will pay after the first 30 days.
Procedural notes: the court considered the screenshots Berry saw as matters outside the pleadings. Berry initially contested their accuracy, authenticity, and completeness, and the court granted the parties limited discovery with respect to the screenshots. Because the screenshots could be directly linked to Berry’s account through a unique campaign ID number, the court took judicial notice of them, rejecting Berry’s opposition that the screenshot didn’t demonstrate the entire enrollment process or show what the page looked like on the computer screen. The enrollment page was central to Berry’s claims, and there was no reasonable dispute as to the accuracy of the screenshot. Likewise with the acknowledgement page Berry was given, confirmation email, and account history, along with enrollment webpage screenshots from two other cases cited by Barry in his response to the motion to dismiss.
Berry also requested judicial notice of Congressional reports on aggressive sales tactics on the internet and the resulting legislation (which, it is to be hoped, will protect future Berrys), which became law Dec. 29, 2010. The court took judicial notice of the existence of these reports and the law, but not the reports’ findings and contents, or the congressional statements issued with the new law.