Monday, April 18, 2011

Screenshotapalooza:Webloyalty disclosure sufficient as a matter of law

Berry v., Inc., 2011 WL 1375665 (S.D. Cal.)

Berry sued Webloyalty over his enrollment into a membership program on the internet. He bought tickets from 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).
After the clicking on the coupon, Berry was presented with an enrollment page where he entered his email address and clicked on a green button. The court pointed out that this page doesn’t display the logo anywhere, which I take it supports the conclusion that he should have known he was signing up for something different. The page contains several disclosures of the terms and conditions, including at the top: “Thank You ... Sign up to claim your rewards! Click YES below to get your $20.00 Cash Back Award if you sign up for all Cash Back Rewards of Shopper Discounts & Rewards, the premier online savings service FREE for the next 30 days and only $12 per month thereafter billed to the credit card or deducted from the debit card you used at today.”
Lower down the page offered a “Member Care Guarantee— Email reminder before first monthly charge— Cancel anytime hassle-free, online or by phone.”
Later: “So claim all your Shopper Discounts & Rewards Benefits ... plus get your $20.00 Cash Back Award! You'll get your $20.00 Cash Back Award and instructions on the next page so you can access the site and start saving today! Plus we'll send your Membership kit email to you at your email address. Try all the benefits free for the next 30 days FREE and see how much you save! There's no obligation to continue. If you are completely satisfied, do nothing and you'll enjoy ongoing savings for only $12 a month and of course you have our Guarantee as described in the Offer and Billing Details! There is no limit in the amount of money you can save!”
And there was another disclosure in a yellow bubble: “30 DAYS FREE plus only $12 a month thereafter.”
And further reiteration of the details under “Offer and Billing Details.”
And a statement indicating that, by providing an email address, the shopper agreed to have his credit card information transferred from to defendant.
This was also repeated in the “Details” section, where defendant’s use of’s stored credit/debit card info instead of requiring it to be reentered was labeled “for your convenience.”
The court applied Rule 9(b) to the fraud-based claims, though it doesn’t seem that it mattered. The court was convinced that the explicit and repeated disclosures defeated the misrepresentation claims. The disclosure immediately above the email address, which said, “By entering my email address as my electronic signature and clicking YES, I have read and agree to the Office and Billing Details and authorize to securely transfer my name, address and credit or debit card information to Shopper Discounts & Rewards for billing and benefit processing,” was sufficient to place reasonable consumers on notice that they were entering into the Shopper Discounts & Rewards club. The page also disclosed the $12/month charge after the first month and that there’d be an email reminder before the first monthly charge. This was sufficient—a consumer can’t decline to read clear and easily understandable terms.

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.

1 comment:

Mac Harwood said...

One section of the agreement reads 'By entering my email address as my electronic signature ..'

It's interesting because copyright law insists that all transfers of exclusive rights be done only with a signature - and so cannot be done with a simple 'click through' contract.

Yet here is a 'click through' contract that might be a way around that - because the contract states that the tiny piece of text that I type in is deemed to be 'my signature'!

Clearly that is false - my email address is not my signature in any sensible definition of the word - but could this sleight of hand be enough to bypass a major point of copyright law?

(Note: The above word is not my signature. It is just my name. Nor is the word verification I'm about to type in ('dement') my signature. Am I forced to say that continually just in case there is something in the fine print of the blog that deems otherwise?)