Last year, this blog raised concerns regarding the TCCWNA, its growing popularity with plaintiffs’ lawyers and the implications for online retailers. At a high level, the TCCWNA is a New Jersey consumer protection law that focuses on contractual terms (including online terms of service) governing transactions between sellers/service providers and New Jersey consumers. It prohibits sellers/service providers from including certain common provisions in their contracts with New Jersey consumers, and provides aggrieved New Jersey consumers with the right to recover from the seller/service provider a civil penalty of not less than $100 per violation. The TCCWNA applies even if the relevant contractual terms are expressly governed by the laws of a state other than New Jersey. Continue Reading E-tailers Rejoice as Decisions Limit Lawsuits in Federal Court for Alleged Violations of New Jersey’s Controversial Consumer Protection Law
The Internet Movie Database (IMDb) has filed suit to overturn a law that requires the popular entertainment website to remove the ages or birth dates of people in the entertainment industry upon request.
Vine might not be history after all.
Twitter users posted more than one billion election-related tweets between the first presidential debate and Election Day.
Facebook is testing a feature that allows company Page administrators to post job ads and receive applications from candidates.
People who create or encourage others to use “derogatory hashtags” on social media could be prosecuted in England and Wales.
A new “tried it” checkmark on pins will allow Pinterest users to share the products and projects they’ve purchased or attempted.
Did social media ads allow political campaigns to circumvent state laws prohibiting the visible promotion of candidates within a certain distance of polling places?
The Eight Circuit held that a college has the right to expel a student from its nursing program for inappropriate social media posts about his classmates, including the suggestion that he would inflict on one of them a “hemopneumothorax”—a lung puncture.
Law enforcement officials are increasing their use of social media to locate missing persons.
An unemployed single mother in California is facing several misdemeanor charges for selling her ceviche over social media.
Coming soon to a vending machine near you: Snapchat Spectacles (but only if you live in a densely populated area like New York or Los Angeles).
Social media analytics firms claim that social media did a better job at predicting Trump’s win than the polls.
As part of the European Commission’s Digital Single Market initiative, the European Commission has published a draft Regulation aimed at preventing traders from discriminating against customers located in other EU Member States by denying those customers access to e-commerce sites, or by redirecting those customers to websites that offer inferior goods or sales conditions—a practice known as geo-blocking. The proposed new rules will benefit both consumers and businesses that purchase goods or services within the EU (excluding resellers).
The European Commission believes that geo-blocking and discriminatory practices undermine online shopping and cross-border sales within the EU.
The Regulation, which must still undergo review by the European Parliament and the Council of the EU, may change and is expected to be in force in 2017 (except the ban on discriminating against customers of electronically supplied services, which is expected to be effective beginning July 2018). When it is adopted, the Regulation will automatically take effect in all Member States without each Member State having to implement it into national law. Continue Reading European Commission Publishes Draft Regulation Prohibiting Geo-Blocking by Online Traders and Content Publishers
The latest issue of our Socially Aware newsletter is now available here.
In this issue of Socially Aware, our Burton Award winning guide to the law and business of social media, we discuss the impact online trolls are having on social media marketing; we revisit whether hashtags should be afforded trademark protection; we explain how an unusual New Jersey law is disrupting the ecommerce industry and creating traps for the unwary; we explore legal and business implications of the Pokémon Go craze; we examine a recent federal court decision likely to affect application of the Video Privacy Protection Act to mobile apps; we discuss a class action suit against an app developer that highlights the legal risks of transitioning app customers from one business model to another; and we describe how Europe’s Right to Be Forgotten has spread to Asia.
All this—plus infographics illustrating the enormous popularity of Pokémon Go and the unfortunate prevalence of online trolling.
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If your company is involved in selling products or services to consumers in New Jersey over the web or through mobile apps, you’ll want to read this blog post.
In what amounts to a feeding frenzy, plaintiffs’ lawyers are working overtime bringing class action suits against e-commerce companies, alleging that their online terms and conditions violate New Jersey’s unusual Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”). Some of the online retailers to have been sued include Victoria’s Secret, Bed Bath & Beyond and TOYS ‘R’ US, with more suits being filed every day.
Unlike most consumer protection laws, the TCCWNA focuses specifically on the contractual terms governing certain transactions with consumers, imposing limitations on such terms even if such contractual terms are governed by the law of a state other than New Jersey—creating a potential gotcha for e-tailers who are based outside of New Jersey and who traditionally have their online terms and conditions reviewed only by lawyers admitted to practice in the state whose laws govern such terms and conditions.
Although the TCCWNA was enacted in 1981, it has only recently achieved notoriety, as more and more plaintiffs’ lawyers have embraced the statute due to its broad scope and its statutory penalty of not less than $100 per violation without the need to prove actual harm.
Overview of the TCCWNA
New Jersey adopted the TCCWNA over 30 years ago not to create new rights for consumers, but rather to “bolster rights and responsibilities established by other laws,” particularly those established by New Jersey’s Consumer Fraud Act (“CFA”). Observers have noted that the number of TCCWNA cases has been increasing in the last few years, particularly since 2013 when the Supreme Court of New Jersey in Shelton v. Restaurant.com, Inc. found that online certificates or coupons were subject to TCCWNA rules and opened the door to TCCWNA class actions stemming from e-commerce.
The TCCWNA applies where a company is a “seller, lessor, creditor, lender or bailee,” offering its services to a “consumer” or “prospective consumer” in New Jersey. A “consumer,” under the TCCWNA, is defined as “any individual who buys, leases, borrows, or bails any money, property or service which is primarily for personal, family or household purposes.” Indeed, courts have emphasized that the TCCWNA is inapplicable unless the plaintiffs are consumers.
The text of the TCCWNA prohibits three types of provisions in consumer contracts, warranties, notices and signs.
First, it prohibits provisions violating “clearly established” legal rights of a consumer or responsibilities of a seller, lessor, creditor, lender or bailee. These rights and responsibilities may arise from federal or state law. For example, one court found that provisions restricting limitations periods for initiating lawsuits, asserting counterclaims or raising affirmative defenses violate consumers’ rights under federal and New Jersey procedural rules.
Second, the TCCWNA prohibits provisions waiving a consumer’s rights under the TCCWNA. In Johnson v. Wynn’s Extended Care, Inc., for example, the U.S Court of Appeals for the Third Circuit held that a provision in a service contract that prevented the recovery of attorneys’ fees and costs constituted a waiver of a consumer’s rights under the TCCWNA, and was therefore prohibited.
Note, however, that at least two cases have found that a claim under the TCCWNA cannot be based merely upon an omission. As one court noted, the statute’s use of the term “includes” suggests that only a statement affirmatively “included” in the consumer contract, warranty, notice or sign should give rise to liability; in addition, the legislative history does not include any examples of an omission triggering liability.
Third, the TCCWNA prohibits blanket “inapplicable in some jurisdictions” savings clauses (e.g., phrased “void where prohibited”)—though, notably, it does not prohibit such savings clauses in any warranty. In order for a savings clause to be acceptable under the TCCWNA, the statute requires the clause to specify which provisions, if any, are unenforceable in New Jersey.
In one recent case, Martinez-Santiago v. Public Storage, the following language was found to be in violation of the TCCWNA’s prohibition against overly broad savings clauses: “If any provision of this [agreement] shall be invalid or prohibited under [the law of the state where the applicable premises are located], such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions.”
Certain courts, however, have refused to find such a violation of the TCCWNA when the consumer contract, notice or sign is only available within New Jersey, or when the clause uses the alternative “to the extent permitted by law” phrasing, as discussed below.
TCCWNA’s Potential Danger to Online Companies
The TCCWNA is potentially dangerous for companies operating online for at least three reasons.
First, plaintiffs’ lawyers are pushing for an extremely broad application of the statute. They argue that the TCCWNA applies to almost every company providing consumer products online that are available to New Jersey residents, and to any “written consumer contract” and “written consumer warranty, notice or sign” made available to these residents—presumably encompassing nearly all material displayed or offered by a company online.
Third, the TCCWNA is potentially dangerous for companies because it provides an “aggrieved consumer” with the option to seek recovery of a civil penalty of not less than $100. This means the penalties in class actions—especially the penalties in class actions over online terms and conditions—could add up quickly. The text of the statute also allows for actual damages, reasonable attorneys’ fees and court costs in addition to the civil penalty, and further states that such remedies are cumulative and do not preclude recovery available under other laws.
Some Guidance for Online Companies From Emerging TCCWNA Case Law
Because claims arguing that online terms and conditions violate the TCCWNA have been filed only recently, there is only sparse guidance from the courts on how online companies selling into New Jersey can protect against these lawsuits.
Moreover, any such company, if it has not already done so, should promptly contact New Jersey counsel for advice on how to ensure its online terms and conditions are compliant with the TCCWNA.
With those important caveats in mind, recent court decisions applying the TCCWNA do highlight some potential precautionary measures for website operators.
For example, as a first line of defense, it may be prudent for companies to include, and seek to bolster the enforceability of, an arbitration provision and a related class action waiver clause in their online terms and conditions. As an example, in one TCCWNA case, the Supreme Court of New Jersey indicated that an arbitration provision would have been enforceable if it had clearly and unambiguously notified the consumer that she was waiving her statutory right to seek relief in the court of law. While there is no prescribed wording for a valid arbitration provision, one New Jersey court found the following arbitration notice to be acceptable:
The parties to this agreement agree to arbitrate any claim, dispute, or controversy, including all statutory claims and any state or federal claims, that may arise out of or relating to the [subject matter of the agreement]. By agreeing to arbitration, the parties understand and agree that they are waiving their rights to maintain other available resolution processes, such as a court action or administrative proceeding, to settle their disputes.
As a second line of defense, it may be prudent for companies, working with New Jersey counsel, to review and potentially revise their online contracts, warranties and notices in light of TCCWNA cases to date. One approach suggested by existing TCCWNA case law is that businesses can avoid violating the TCCWNA’s prohibition on blanket “inapplicable in some jurisdictions” savings clauses by using different language in their savings clauses to achieve the same result. As noted above, the text of the TCCWNA prohibits savings clauses that state that certain terms “may be void, unenforceable or inapplicable in some jurisdictions” if such clauses do not identify which terms are or are not void, unenforceable or inapplicable in New Jersey. In Kendall v. CubeSmart L.P., however, the United States District Court for the District of New Jersey found that companies could use savings clauses that “attempt…to conform to New Jersey law.” Citing several cases, it held that the phrases “to the extent permitted by law,” “in the manner permitted by applicable law,” “allowed by applicable law” and “or as otherwise permitted by applicable law” were acceptable in savings clauses under the TCCWNA.
Snapchat has caught on with “oldies” (that’s people 35 and older, FYI).
Facebook Messenger is testing “Secret” mode, a feature that allows some messages to be read only by the recipient.
A South Korean copy of Snapchat has taken off in Asia.
Meet MikMak, the mobile shopping network that sells via video.
Dieters are flocking to Instagram.
Twitter is looking to ink more NFL-style streaming deals.
The Wall Street Journal profiles Instagram’s founder, Kevin Systrom.
China is reportedly launching a crackdown on “fake news” spread on social media sites.
Snapchat’s new feature, “Memories,” will allow users to retain some content.
Specifically, to complete his purchase of a credit report on Transunion’s site, Sgouros was required to complete several steps:
- Click on a large “Click Here” button on the website’s homepage under the heading “Get Your Credit Score & Report.”
- Furnish identifying information, and click “yes” or “no” to Transunion’s offer to send offers from its “trusted partners,” and then click a large orange button labeled “Submit & Continue to Step 2.”
- Create a user account name and password, input credit card information and click a “yes” or “no” bubble in answer to a question about whether the user’s billing information is the same as his or her home address.
- Click a button stating: “You understand that by clicking on the ‘I Accept & Continue to Step 3’ button below, you are . . . authorizing TransUnion Interactive, Inc. to obtain information from your personal credit profile . . .”
The “I Accept & Continue to Step 3” button was, however, located below a rectangular scroll window with the words “Service Agreement” at the top, and the small hyperlinked words “Printable Version” appeared beneath the scroll box. The 10-page printable version of the Service Agreement in the scroll box did mention the arbitration provision on its first page and did include that arbitration provision in full on its eighth page. But the scroll window allowed Sgouros to view only three lines of text at a time, and no mention of the arbitration provision appeared in the immediately visible text.
Most significantly, the “I Accept & Continue to Step 3” button did not require Sgouros to first click on the scroll box or to scroll down to view its complete contents, nor did it call Sgouros’s attention to the arbitration provision in any way. The court detailed the shortcomings of Transunion’s implementation as follows:
[W]hat cinches the case for Sgouros is the fact that TransUnion’s site actively misleads the customer. The block of bold text below the scroll box told the user that clicking on the box constituted his authorization for TransUnion to obtain his personal information. It says nothing about contractual terms. No reasonable person would think that hidden within that disclosure was also the message that the same click constituted acceptance of the Service Agreement.
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The latest issue of our Socially Aware newsletter is now available here.
In this issue of Socially Aware, our Burton Award winning guide to the law and business of social media. In this edition, we discuss what a company can do to help protect the likes, followers, views, tweets and shares that constitute its social media “currency”; we review a federal district court opinion refusing to enforce an arbitration clause included in online terms and conditions referenced in a “wet signature” contract; we highlight the potential legal risks associated with terminating an employee for complaining about her salary on social media; we explore the need for standardization and interoperability in the Internet of Things world; we examine the proposed EU-U.S. Privacy Shield’s attempt to satisfy consumers’ privacy concerns, the European Court of Justice’s legal requirements, and companies’ practical considerations; and we take a look at the European Commission’s efforts to harmonize the digital sale of goods and content throughout Europe.
All this—plus an infographic illustrating the growing popularity and implications of ad blocking software.
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The European Commission has published two draft directives on the supply of digital content and the online sale of goods that aim to help harmonise consumer law across Europe. In proposing these new laws, the European Union is making progress towards one of the main goals in its Digital Single Market Strategy (announced in May 2015), which is concerned with strengthening the European digital economy and increasing consumer confidence in online trading across EU Member States. According to the Commission, only 12% of EU retailers sell online to consumers in other EU countries, while more than three times as many sell online in their own country. The Commission has also announced a plan to carry out a fitness check of other existing European consumer protection laws.
This article outlines the potential implications of these latest developments, with a particular focus on the UK and Germany.
DIGITAL CONTENT AND ONLINE SALES OF GOODS
This is not the first time that the Commission has tried to align consumer laws across the EU: the Commission’s last attempt at a Common European Sales Law faltered in 2015. But the Commission has now proposed two new directives dealing with contracts for the supply of digital content (“Draft Digital Content Directive”) and sales of online goods (“Draft Online Goods Directive”) (together, the “Proposed Directives”). The Online Goods Directive will replace certain aspects of an Existing Sales of Consumer Goods and Associated Guarantees Directive (“Existing Goods Directive”), whereas the Digital Cotent Directive introduces a new set of rights for consumers when they buy digital content across the EU.
Part of the issue with previous EU legislative initiatives in this area is that “harmonised” has really meant “the same as long as a country doesn’t want to do anything different”. This time, the Proposed Directives have been drafted as so-called “maximum harmonisation measures”, which would preclude Member States from providing any greater or lesser protection for the matters falling within their scope. The Commission hopes that this consistent approach across Member States will encourage consumers to enter into transactions across EU borders, while also allowing suppliers to simplify their legal documentation by using a single set of terms and conditions for all customers within the EU.
The Proposed Directives will need to be adopted by the EU Parliament and Council before becoming law. Member States would then have two years to transpose the Proposed Directives into national law.
The latest issue of our Socially Aware newsletter is now available here.
In this issue of Socially Aware, our Burton Award-winning guide to the law and business of social media. In this edition, we offer tips for a successful—and legal—advertising campaign; we examine a New York State Appellate Division opinion significantly limiting a personal-injury-case defendant’s access to the plaintiff’s social media posts; we review a court decision highlighting potential risks for companies seeking to exploit works licensed under the Creative Commons regime for commercial use; we take a look at an FTC report intended to help companies minimize the legal and ethical risks associated with their use of big data; we consider the complications that a federal district court opinion may create for companies hosting user-generated content; we explore the FTC’s guidance for businesses that publish advertising that could be confused with editorial content; we discuss seven key things to consider when drafting the terms and conditions for a mobile app in Europe; and we describe the key provisions of the European Commission’s proposed directives concerning a business’s online sale of goods or digital content to consumers.
All this—plus an infographic illustrating the state of the U.S. online music industry.
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