Online contracts obtained through deception may be easier than you’d think, despite a 9th circuit opinion knocking one down.
Link: Lee v. Intelius Inc.
Have you ever purchased something online only to find recurring credit card charges for something you don’t want, didn’t ask for and never heard of? A recent 9th circuit decision shows the limits of clickthroughs to create binding contracts and the risks for consumers who click without looking.
A plaintiff purchased an online background check from Intelius. After the purchase, the website offered $10.00 cash back for a survey, which also asked for an email address with a statement that entering the email constitutes an electronic signature and authorization to charge/debit their account. The plaintiff was not asked to reenter his credit card information. Following an additional click, which included a statement on the website for the background check, the website said that the click constitutes an agreement to “Offer Details” and authorized Intelius to pass the plaintiff’s information to “a service provider of Intelius.”
It turns out that the service provide was Adaptive Marketing, a third party, not part of Intelius and not mentioned by name on the website. The additional efforts were actually to purchase a monthly service from Adaptive.
The Court’s Reasoning
The arbitrator clearly saw the process to be a misleading set up to get purchasers of Intelius’ background checks to subscribe for Adaptive’s services. The description of the process was “designed to deceive.” However, this did not settle the matter.
It is clear that an electronic “signature” can be legally sufficient under Washington law even if it is not clear under what circumstances a “click” constitutes a signature.
However, the law reuires that the “essential elements” of a contract be set forth in writing, including the identification of the parties to the contract. Adaptive claimed that the parties need not be named and cited cases regarding companies doing business under assumed names. However, nothing on the website identified Adaptive as the party with whom the plaintiff was contracting. In addition, it was ambiguous at best that anyone other than Intelius was involved.
The arbitrator ruled that a contract had not been formed.
This case was not as consumer friendly as the holding suggests. Just adding “Adaptive Marketing” in some manner on the website may have been enough to justify enforcing the contract. If the court was looking to say “We will look closely at circumstances where there is simply no way the user is purchasing some bogus subscription,” it did not exactly make a strong statement.
Even confusing and deceptive language and formatting on a website can induce the formation of an enforceable contract. However, all of the elements of a contract must be present, not just “as suggested by.”