UK-based technology company, Purple WiFi, recently gave consumers a salient lesson in why it’s important to read terms of use.
What happened?
Purple provides WiFi hotspots for various clients including retail outlets, restaurants and hotels. People visiting these venues can access the free WiFi provided they create an account and accept Purple’s terms of use.
Purple decided to try a little experiment. It amended its terms of use to include a clause that if consumers use their free WiFi, they were agreeing to perform 1,000 hours of community service including (amongst other delightful tasks) removing animal excreta from community parks, giving hugs to stray cats and dogs, painting snail shells (apparently to brighten up their lives), and cleaning portable toilets provided at events and festivals.
The terms also said that anyone who contacted the company to say they noticed the clause would receive a prize.
The amended terms were published online for two weeks. More than 20,000 people accessed Purple’s free WiFi service during that time, and only one solitary consumer contacted the company to say they’d noticed the clause.
Why did Purple do it?
Purple claims the exercise was designed to reinforce why it’s important to actually read the terms of use when signing up to a service, whilst simultaneously broadcasting that it’s the first WiFi provider to comply with the EU’s new General Data Protection Regulation (GDPR), which comes into effect in May 2018. A nice little marketing stunt, with a lesson thrown in for good measure.
Purple claims it would never have enforced the clause. But it raises an interesting question as to whether they could.
Unfair contract terms – the UK position
Unfair contract terms legislation was first enacted in the UK in the late 1970s, and was recently updated in 2015. As it stands under UK law, if Purple wanted to enforce the requirement that consumers perform 1,000 hours of menial tasks in exchange for its WiFi services, this requirement would have had to have been prominently disclosed so that consumers were aware of it prior to accessing the services.
Therefore, on that point alone, in our view it’s unlikely the term would have been enforceable.
What if this had happened in Australia?
Under the Australian Consumer Law, for a contract term to be considered ‘unfair’ it must:
- cause a significant imbalance in the parties’ rights and obligations;
- not be reasonably necessary to protect the legitimate interests of the party advantaged by the term; and
- cause financial or other detriment if it were relied on.
The term must fail all three of these limbs to be deemed ‘unfair’. Only a court can determine whether a term is unfair, and in reaching that decision a court will consider matters such as how transparent the term was, whether it was expressed in simple language and presented clearly to the consumer.
Taking all this into account, what do we think about this term?
Clearly it’s not a transparent term and was not adequately brought to the attention of the consumer prior to accessing the service. But would a court consider it unfair – does it fail all three limbs of the fairness test under the Australian Consumer Law? Arguably, it would cause an imbalance in the parties’ rights and obligations (because performing such tasks is not an appropriate price to pay for WiFi), it’s not reasonably necessary to protect the service providers’ legitimate interests (due to its commercial arrangements with the venues via which consumers were able to access the free WiFi) and it would cause detriment if relied on (1,000 hours of community service is significant price to pay).
While the term is clearly nonsense, in our view it would likely be unenforceable under the Australian Consumer Law.
What do your terms say?
Do your standard terms pass the fairness test? If you’re not sure, give us a call for an obligation free chat.
