You Can’t Change Online Terms Solely by Email

In Changing Online Terms of Use? Be Sure to Give Notice First!, I discussed a case that held that merely changing a website’s online terms does not bind users to the new terms – the users must receive notice that the terms have changed and how they have changed. This post discusses a recent case (Schnabel v. Trilegiant Corp.) that comes to a consistent conclusion from a different direction: Merely sending an email that adds a provision to existing online terms does not bind users to that provision.

Plaintiffs brought a class action alleging that Trilegiant and its parent Affinion Group LLC engaged in unlawful, unfair and deceptive practices in enrolling customers of the defendants’ affiliated entities (such as Priceline.com) in Trilegiant’s Great Fun membership program.

Defendants argued that the case should be dismissed, because plaintiffs received an email stating that any dispute must be resolved either in small claims court or by arbitration, and that any arbitration must involve solely the named parties, not a class.

The U.S. Court of Appeals for the Second Circuit disagreed, stating ” We do not think that an unsolicited email from an online consumer business puts recipients on inquiry notice of the terms enclosed in that email and those terms’ relationship to a service in which the recipients had already enrolled, and that a failure to act affirmatively to cancel the membership will, alone, constitute assent.”

The court went on to state that “the arbitration provision here was both temporally and spatially decoupled from the plaintiffs’ enrollment in and use of Great Fun; the term was delivered after initial enrollment and Great Fun members such as the plaintiffs would not be forced to confront the terms while enrolling in or using the service or maintaining their memberships.” [Emphasis added – I love the phrase “temporally and spatially decoupled”.]

Bottom line: If you want to change online terms, notify users in a way that is guaranteed to bring the change’s existence and nature to users’ attention when they use the site or maintain their memberships.

Check out all posts about online terms.

Dana H. Shultz, Attorney at Law? +1 510 547-0545? dana [at] danashultz [dot] com
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