Have you ever been online and agreed to a company’s “terms of service” without reading it?  Have you ever encountered a website which doesn’t make you agree to its “terms of service” prior to using its services?  Before clicking the agree button, do you make sure to read the entire agreement? Blindly agreeing to these terms can and should cause consumers great concern.  However, as we see here, these verbose agreements don’t always work out favorably for the company either.

Zappos, an online shoes and clothing retailer owned by Amazon.com, is currently being sued by the customers of their website after the website was hacked into.  Apparently, 24 million Zappos customers got their email addresses and personal information stolen by hackers.

Zappos “terms of service”

Zappos wants to resolve the matter through arbitration per the “terms of service.”  However, the federal court ruled that the arbitration clause was invalid.  Zappos is obviously not happy with this decision, as it will be forced to settle the case or take its chances in court.

Why can Zappos not resolve the case through arbitration?

  • Zappos may not resolve the case through arbitration because their customers had not agreed to its “terms of service.”
  • Even though the “arbitration” term was on the website, there was no contract between Zappos and the customers binding them to go through arbitration.

What can Companies do to guarantee that customers agree to their terms?

  • They can urge customers to click a button that assures that they agree to the “terms of service.”

 

Alright everyone, go read your iTunes Terms of Service!

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