Older readers will recall the old TV commercial where wise “Mr. Owl” determines that it takes three licks to reach the center of a tootsie pop. In a recent Washington federal district court case, a judge has determined how many clicks it takes for an internet merchant to engage in a deceptive business practice. (Here’s a link to download the order.) As described below, the judge found that spreading the terms of an offer over 6-7 website screens may be too subtle and thus deceptive, in violation of a Washington state consumer protection law.
This case differs from similar cases involving allegedly deceptive internet offers because, here, the judge considered the offer in the overall context of the website in which it appeared, rather than focusing on whether the terms used for the offer accurately described the offer. This contextual approach is more favorable to consumers because it considers how a merchant presents the terms of sale, as well as the accuracy of the terms themselves. Because the judge’s analysis may be applied to other states’ laws, those of you who sell on the internet must be careful to ensure both that your terms of sale accurately describe the offer, and that you present them in a manner that will be easily noticed by viewers of your site.
This case involves Intelius, which sells background reports, cell phone number information, and the like through a website that also includes offers for additional, third-party services that are charged on a monthly basis, often after a short, free-trial period. The plaintiffs claimed that they unintentionally purchased additional third-party services from Intelius because its website deceptively hid the real terms of the offers—by spreading the terms over numerous website screens, by failing to make the written terms of the offer easy to notice, and by suggesting that these additional services were free. Here is how the court described its concern about some of these offers:
“In Keithly’s case, a service was added to the consumer’s order based on nothing more than the selection of a cheaper pricing option. The true price of the item was disclosed on a single page in a subdued and easily-overlooked manner. The order summary misleadingly and repeatedly stated that the cost of the added service is $0.00, and the payment authorization was expressly limited to the amount the consumer intended to pay for the originally-sought item. The confirmation page contained no information regarding what was purchased, the future charges, or how to cancel the subscription service. This technique, combined as it was with two other marketing techniques also designed to foist additional products or services on the consumer, actually deceived Keithly and, according to the Attorney General, other Washington consumers. Because this marketing scheme presents a subscription service to the consumer in such a way that a substantial portion of the population is not even aware that an offer has been made, much less accepted, one could reasonably find that this technique has the capacity to deceive.”
The court addressed this issue because Intelius and the other defendants filed a motion arguing that the terms of their offers were not deceptive. They based their argument on cases which focus on whether the terms fairly and accurately describe the terms of an offer made on a website. If the terms were accurate, then the consumer could—or should—have seen them, so the argument goes.
The judge in the Intelius case disagreed with this narrower approach taken by other courts and instead took a broader approach that also considered the context in which an internet offer is communicated to potential customers: “The issue is not . . . whether . . . consumers should be held to terms that they declined to read. The issue is whether a reasonable consumer could have been aware that there was a bargain in the offing such that failure to look for and review the terms of the unexpected bargain would be justified.”
Therefore, cautious internet merchants should consider what a “reasonable consumer” would notice when viewing a website containing a sale offer. Offers should be described in easy-to-see text and should be presented on a single screen, or no more than a few contiguous screens. Although you should continue to be careful choosing words that accurately describe an offer, you should also consider how those terms will be seen by viewers of your websites.
