Click Yes to Accept: Fairness and Transparency in Consumer Contracts in Europe

Companies contracting with consumers have to take care to ensure their agreement terms are enforceable. In one of the first post-Brexit decisions on issues in an online consumer contract, a UK court recently showed that principles of fairness and transparency remain vital in the terms and conditions of consumer digital contracts.

In Europe, drafting digital consumer contracts requires extra care and thought to be given towards incorporation, meanings, and additional regulations in comparison to B2B contracts. This is equally true in a post-Brexit world as it was back in 2012 when we reported on something similar. Plus ça change, plus c’est la même chose – as no Brexiteer would ever say.

Any consumer-facing company doing business online must step back and ask the question: Would this hold up in court? We’ve outlined some key takeaways from this case for organizations to consider when drafting digital consumer contracts that they apply to UK-based customers.

THE HIGH COURT RULING IN FAVOUR OF THE CONSUMER

Ending a seemingly successful session on an online casino, Mr Andrew Green, a frequent user of betting games, had amassed over £1.7 million of betting chips on Betfred’s mobile casino app. However, when he tried to withdraw his winnings, Betfred blocked his account. After contacting Betfred, the company refused to give Mr Green his winnings, claiming that there had been a glitch in the game he had played and, therefore, Betfred was entitled by its terms and conditions (the “Betfred T&Cs”) to refuse to pay out the chips to Mr Green.

Betfred tried to contend that the Betfred T&Cs excluded its liability to pay Mr Green. The UK High Court ultimately found that the wording of the Betfred T&Cs was:

• Inadequately clear to exclude Betfred’s liability in these circumstances;
• Not actually incorporated into the contract with Mr Green, due to both the way they were presented and the lack of notice to the consumer; and
• Neither transparent nor fair, to the point where Betfred was unable to rely on them.

Betfred had therefore failed on the three core consumer contract principles: interpretation, incorporation and fairness, enshrined under the UK’s Consumer Rights Act 2015 (“CRA 2015”).

1. Exclusion of liability: interpretation

An exclusion clause must clearly and unambiguously cover the liability in question. Here, the court found that the Betfred T&Cs did not deal with the failure to pay out winnings: they were not specific and clear enough to apply to the glitch that occurred. The wording used in the Betfred T&Cs (e.g., “malfunction” and “communications or system errors”) had a range of meanings, and it was unclear and undefined.

2. Incorporation of exclusionary clauses

Any onerous or unusual term in consumer T&Cs needs to be fairly brought to the attention of the consumer. In this case, the Betfred T&Cs did not adequately bring the exclusion clauses to
Mr Green’s attention. It was particularly unreasonable to expect that he would have read beyond the game rules to find a set of T&Cs which were not required for game access.

3. Ensuring fairness and transparency

Under the CRA 2015, contract terms must be transparent and those which are unfair will not be binding on the consumer.  The ruling reminds companies that terms must be “expressed fully and clearly and contain no hidden traps or pitfalls, especially clauses that may operate to the customer’s disadvantage”.

CONTEXTUALISING THE BETFRED JUDGMENT

Prior to the CRA 2015, UK consumer law was fragmented and difficult to interpret, with no express guidance regarding the presentation and substance of consumer notices and terms. Often, this resulted in regulators and businesses expressing different views. The landscape has since changed, reflecting the prominence of the CRA 2015, and courts regularly consider the concept of fairness when assessing consumer T&Cs. The position is similar in the EU, which is unsurprising because the CRA 2015 takes its cue from the EU Consumer Rights Directive 2013.

That being said, the UK government has already started to show an appetite for regulatory divergence, post-Brexit. As a result, it is possible that we may start to see some subtle (and perhaps some not so subtle) differences emerging between the UK and the EU in respect of how businesses contract digitally with consumers. Nonetheless, we anticipate that the principles emphasised in the Betfred judgment will remain relevant to online digital contracts in the UK market.

IMPORTANT TAKEAWAYS

Any organisation doing business digitally with consumers – certainly in the UK but also elsewhere – needs to take care to:

• Think from the perspective of an average informed consumer and take into account their probable knowledge of and experience with the subject matter.
• Clearly and unambiguously express specific circumstances where they might need to exclude liability, and include adequate signposting to significant exclusions of liability. Any ambiguity will likely play out against the company in court.
• Ensure that generic words are well-defined so that they capture the intended meanings.
• Think about presentation. Avoid using formatting such as closely typed lower-case words or numerous paragraphs of capital letters.
• Limit the length of contracts. If consumer T&Cs are presented in a “click and scroll” format, it is probably unreasonable to expect the party to have noted the importance of the key clauses.
• If this is not the first time that the reader is looking at consumer T&Cs, consider using reminders to bring important clauses to the reader’s attention.
• Be specific when referring to other contracts that are incorporated into consumer T&Cs, especially where the provisions of those contracts are onerous.

Georgia Wright and Georgia-Louise Kinsella , London trainee solicitors contributed to the drafting of this alert.