Three E-commerce Legal Myths Debunked

ecommerce legal myths debunkedContracts and agreements are a huge part of the e-commerce ecosystem. And despite the commonly accepted wisdom that we should never sign on the dotted line without first reading a document, most folks click “I agree” without reading a single word. Which raises a question: Is it legal to jam e-commerce terms with outrageous clauses and sneaky language? Below, we debunk three urban legend loopholes regarding e-commerce.

Do Prolix Contracts Hold Up In Court?

Let’s be blunt for a second and admit that lawyers, as a group, don’t have the best reputation. And if we’re being open, a lot of the hostility is rooted in the way we sometimes write. Because yes! It legalese does come across as overwrought and needlessly complicated. Legal prose can be so dense that people instinctively wonder: “What are they hiding behind all this impenetrable language!?”

Now, to be fair to us attorneys , our thick prose, in almost all cases, has little to do with trickery and everything to do with precision and professional traditions. But yes, the criticism is fair — especially as terms, agreements, and contracts become more central to our daily lives.

But did you that in 2010 the 111th Congress enacted the Plain Writing Act, which enhances “citizen access to Government information and services by establishing that Government documents issued to the public must be written clearly, and for other purposes.”

You may be thinking: That act only applies to laws and government communications. And yes, technically, that’s true. But over the past decade, judges have carried the spirit of the law into non-government cases and ruled against entities with outrageously complex terms and contracts.

The Takeaway: There are federal laws that guard against the use of overly complicated contract and legislative language. As such, hiding questionable clauses in agreements may not be a viable legal loophole.  Simultaneously, consumers signing agreements should assume responsibility for the terms.

Can You Snatch Away Someone’s Right to Post an Online Review Using Contract Clauses?

In the not too distant past, it was perfectly legal to insert in disclaimers and user agreements clauses that stripped signatories of intellectual property rights of their online reviews.

Let’s use a hypothetical example.

Donna is a dentist who wanted to make bank, and she knew that bad reviews could severely hamper sales. So she asked her lawyer about getting bad reviews expunged from the Internet. After some research, Donna’s lawyer added a clause to her patient agreement that transfers the intellectual property rights of patient reviews to Donna. Then, when faced with a negative screed, Donna would send the “offender” a legal letter explaining that she “owns” the review and wishes for it to be deleted. Failure to do so, the note typically continued, would result in legal action. Uninterested in a protracted legal fight, nearly everyone who received Donna’s letter complied and deleted the bad review. End of story.

Believe it or not, YES, for a brief time, this method actually worked! But legislators got hip to the loophole and closed it with the Restore Online Shoppers’ Confidence Act.

The Takeaway: It is no longer legal to sneak an intellectual property clause into client, patient, or buyer agreements that strip people of their intellectual property rights as a way to guard against negative reviews. In fact, having such a clause could land you in legal trouble.

Is it Legal to Enroll People in a Subscription Plan Using Just a Contract Clause?

You’ve heard the stories: Someone gets filthy rich by scamming people into a recurring billing scheme that’s 100% dependent on a shady contract clause. Let us assure you: These types of operations fly in the face of Federal Trade Commission promotional guidelines, and many perpetrators get caught…eventually.

Thanks to laws like the aforementioned Restore Online Shoppers’ Confidence Act, Section 5 of the FTC Act, the Lanham Act, and a slew of state laws, it’s now squarely against the law to dupe people into recurring billing plans without getting their express consent. And no, that consent can’t come from a clause buried in an e-commerce checkout agreement. Click here to read about an example case.

The Takeaway: Enrolling people in a recurring billing plan by burying it in a clause or hiding a disclaimer is against the law, and the FTC vigorously punishes companies that do it.

We hope this little post helps dispel some common e-commerce legal myths. For more online marketing and selling tips, views, and news, head to our e-commerce resource center.

The Gordon Law Group works with online sellers, e-commerce platforms, and social media influencers. They handle everything from contract negotiations to offshore tax positioning. Click here to learn more.

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