Consumers Denied Right to Sue

A decision was handed down in a Canadian court recently which has consumer rights groups in an uproar. The issue is whether or not a consumer has a right to sue an online business store.

Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes

The Supreme Court of Canada has decided that consumers cannot sue a company selling products over the internet. This includes foreign online retailers.

According to court documents released by the Supreme Court of Canada, the case didn’t necessarily involve the merits of a lawsuit, but rather, whether or not a consumer has a right to sue a company at all. The decision suggests that merely posting a link on the webpage to the terms and conditions, without bringing them immediately to the consumers’ attention (like, ‘before continuing, you must agree to the terms and conditions…’) is sufficient to bind them to the contract in the first place.

Court documents described the case, “The Dell company sells computer equipment retail over the Internet. It has its Canadian head office in Toronto and a place of business in Montreal. On April 4, 2003, the order pages on its English-language Web site indicated prices of $89 rather than $379 and of $118 rather than $549 for two models of handheld computers. On April 5, on being informed of the errors, Dell blocked access to the erroneous order pages through the usual address. D, circumventing the measures taken by Dell by using a deep link that enabled him to access the order pages without following the usual route, ordered a computer at the lower price indicated there. Dell then posted a price correction notice and at the same time announced that it would not process orders for computers at the prices of $89 and $118. When Dell refused to honour D’s order at the lower price, the Union des consommateurs and D filed a motion for authorization to institute a class action against Dell. Dell applied for referral of D’s claim to arbitration pursuant to an arbitration clause contained in the terms and conditions of sale, and dismissal of the motion for authorization to institute a class action. The Superior Court and the Court of Appeal held, for different reasons, that the arbitration clause could not be set up against D.”

CIPPIC (Canadian Internet Policy and Public Interest Clinic) was quick to condemn the decision (PDF). “The message from this decision is clear,” said Philippa Lawson, Director of CIPPIC, the Canadian Internet Policy and Public Clinic, University of Ottawa, an intervener in the case. “Consumers cannot rely on the courts to protect them from marketplace abuses. It’s up to legislatures to establish and enforce rules that create balance in the marketplace.”

The press release further reads:

“To its credit, the Quebec government recently passed legislation protecting consumers’ right to sue, regardless of a company’s terms of sale. (This new law came too late for the plaintiffs in the Dell case.) Some other provinces, such as Ontario and B.C., also have legislation that invalidates terms in consumer contracts that purport to bar class actions.”

“All provinces in Canada should protect this fundamental consumer right”, said Lawson. “Indeed, they should go further and actually prohibit terms of sale or service that bar class actions. That way, consumers won’t be misled into thinking that they can’t go to court when in fact they can.”

PIAC (Public Interest Advocacy Centre) also issued a press release condemning the decision:

“The Supreme Court is woefully out of touch with the reality of electronic commerce,” said John Lawford, Counsel for PIAC. In particular, he criticized the Court’s assertion that a simple hyperlink to a separate page of highly detailed contractual terms and conditions should bind a consumer to all those conditions when the consumer is presented with an order page online.”

Dell has yet to issue any statements regarding the latest decision.

Drew Wilson on Twitter: @icecube85 and Google+.

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