Canadian e-commerce customers face legal woes

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The Supreme Court of Canada has upheld a decision involving Dell that could have a negative impact on e-commerce customers in the enterprise.

A group of Quebec consumers attempted to bring a class-action suit against Dell after Axim handheld devices were advertised as much cheaper than they actually were. (In 2003, Dell said on its Web site that the devices sold for $89 and $118, when they actually sold for $379 and $549. Dell has since discontinued the product.)

The consumers attempted to bring Dell Computer Corporation vs. Union des consommateurs as a class-action suit, but Dell had a clause that demanded that any complaints would have to be handled via arbitration, and could not be brought to court.

While Quebec now has legislation against this type of mandatory arbitration (brought about by this case), the suit came too late to benefit from it. The court upheld Dell’s right to force the case into arbitration, citing the clause’s presence in the “terms and conditions” of the online sale as sufficient notice to the customer.

Mandatory arbitration clauses reduce the claimant’s rights, according to Philippa Lawson, director of Ottawa-based Canadian Internet Policy and Public Interest Clinic (CIPPIC). “The option of accessing the publicly funded justice system has been removed even before they’ve decided whether or not that would be the most efficient way of dealing with the issue,” she said.

Arbitration also often puts the complaining consumer or company at a disadvantage, according to John Lawford, counsel for Ottawa-based Public Interest and Advocacy Centre.

“The complaint doesn’t have the weight of 3,000 other complainants. It’s private, so no-one will hear about it,” said Lawford. “The court should’ve put that those clauses are unfair, as it takes away the client’s fundamental right to band together and sue people.”

He said that this type of arbitration clause is becoming increasingly common in the online marketplace — especially when it comes to high-tech goods. “It’s 100 per cent wall-to-wall, especially among the telcos,” said Lawford. “This is certainly a problem for enterprise customers, and especially for smaller business customers, as they would face a similar uphill battle as consumers (in dealing with arbitration). We’re seeing more and more of this unless legislation intervenes.”

The Dell Web site in question was typical in that it contained a hyperlink that listed the terms and conditions of the contract. “This way was take-it-or-leave-it,” said Lawford. “They don’t want to put extra work on the consumer. But (the customers) have to click on it, and read it. In reality, the sale isn’t what’s on the sale screen.”

The court decision, according to Lawson, shows no recognition of marketplace reality. She said, “Customers are not expected to read the terms and conditions…You’re held to a term you never actually agreed to. They’re only of relevance once a dispute has arisen.”

Lawford said that more legislation governing the terms and conditions of online sales should be created. “Online retailers should have an easily seen notice that states that the sale is subject to the following things: the price might be wrong, they could be out of the item, or that it could be illegal in your particular country.”

A separate page that must be clicked through for a successful transaction is the key to a set of terms and conditions that would fully inform the customer about all the terms of sale, according to Lawford.

The software industry is a prime culprit when it comes to unpopular sales conditions, according to Lawson, who said that CIPPIC has come across software vendors that, she said, prohibit criticism of the product, reverse engineering, and the use of the product with a competing product.

Telecommunications companies are frequent offenders, reserving the right to change the terms of a service contract without notice, she said.

Several provinces (including Ontario, British Columbia, Alberta, and Quebec) now have legislation forbidding this type of mandatory arbitration clause, but the Supreme Court decision is still a blow, said Lawson.

She recommends that Canada adopt a similar standard to Europe, where customers have a two-day cooling-off period after an online purchase to return an item, no questions asked.

In a bid to push for legislation in the remaining provinces, the issue will be brought forward to the Consumer Measures Committee, a group of representatives from the consumer protection and industry arms of the government.

Visit our blog pages to read: Products are people too. Wait, no they’re not

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