Contact

Information Technology

    Information Technology

    Amazon's terms and conditions ruled illegal

    In a ruling dated October 28th, 2008, the Court of first instance of Paris declared unlawful or unfair 18 clauses of Amazon's Terms and conditions, Privacy Notice and Marketplace Program. The court ordered Amazon Services Europe and Amazon EU to pay €30.000 to the consumers association ?UFC Que Choisir? which had sued them after several years of unsuccessful negotiations.

    The transactions made on www.amazon.fr are in the name of ?Amazon EU?, a limited company registered under the laws of Luxemburg, acting as seller.  Such sales are governed by Amazon EU's ?Terms and conditions?, and consumers have to agree to a ?Privacy Notice?, which details how their personal data are processed.

    Amazon Services Europe, another limited company registered under the laws of Luxemburg, provides a platform named ?Marketplace? also available via www.amazon.fr, which allows professionals or individuals to buy or sell items online, after having approved their participation to a so-called ?Marketplace Program?.

    UFC Que Choisir, an association acting to protect the interests of the consumers, asked the Court of first instance of Paris to declare unfair or unlawful 36 clauses of Amazon's Terms and conditions, Privacy Notice and Marketplace Program.

    Under French law, terms may be either unfair or unlawful. According to Article L.132-1 of the French consumer code, terms are unfair in agreements between professionals and consumers when they aim to create or result in the creation of a significant imbalance between the rights and obligations of the parties to the contract, to the detriment of the non-professional or the consumer. Terms which are contrary to public order or mandatory legal provisions are unlawful.

    The French Court held unlawful or unfair 18 clauses out of the 36 in balance. Below is an overview of the clauses cancelled by the Court.

    I. Terms and conditions

    - The clause by which Amazon EU excludes its liability for indirect damages

    The clause was drafted as follows: ?We are making every effort to provide the services described in the Terms and conditions. We are liable for any direct damages. Under no circumstances, Amazon shall be liable for loss of profits, commercial losses, data losses, shortfall or any other indirect damages.?

    According to the Court, this clause is contrary to Article L.121-20-3 al 4 of the Consumer code which provides that ?The professional is liable towards the consumer for the proper fulfillment of the obligations deriving from a distance contract? and to Article R132-1 of the same code for which ?Clauses which aim to or have the effect of cancelling or reducing the consumer's right to compensation in the event of non-fulfillment by the professional of any of its obligations, are unfair?.

    - The clause which provides for a copyright assignment to Amazon EU

    Consumers have the opportunity to post comments, suggest ideas or ask questions on www.amazon.fr.

    Amazon EU's terms and conditions provides that the consumer grant Amazon EU a royalty-free and worldwide right to use and reproduce such contents, in any media and for the length of protection of copyrights. The consumer also has to waive the right to be identified as the author of the content.

    The French Court held that this clause interfered with the author's moral right provided by Article L.121-1 of the French intellectual property code. The moral right of the author includes the right to be identified as the author of content. It cannot be waived or assigned.

    - The clause under which only the consumer may be liable in the event of a lawsuit based on the illegality, or breach of third parties' rights, of a content posted by the consumer

        

    Art. 6. I. 2 of Law n°2004-575 on confidence in the digital economy (?LCEN? which implemented Directive n°2000/31/EC on electronic commerce) provides that the hosting provider is not liable for the information stored at the request of a user, on condition that:

    -         The provider does not have an actual knowledge of illegal activity or information; or

    -         The provider, upon obtaining such knowledge, acts expeditiously to remove or to disable access to the information.

    Amazon EU is liable for said contents pursuant to this Article, in its capacity as a hosting provider, from the moment it took cognizance of the illegality of the content.

    This clause is therefore contrary to LCEN since it provides that the liability shall be borne only by the consumer while this liability could be shared with, or completely borne by, the hosting provider.

    II. Privacy notice
    - The clauses which allow Amazon EU to share personal data with subsidiaries and to disclose personal data in order to enforce ?other agreements?

    The clauses were drafted as follows:

    ?We share customer information only as described below and with subsidiaries Amazon.com, Inc. controls that either are subject to this Privacy Notice or follow practices at least as protective as those described in this Privacy Notice?.

    ?We release account and other personal information when we believe release is appropriate to comply with the law; enforce or apply our Conditions of Use and other agreements; or protect the rights, property, or safety of Amazon.com, our users, or others.?

    The Court held that these clauses created an imbalance between the rights and obligations of the parties, for the sharing of the consumer's personal data was imposed on the consumer without indicating the purpose and means of this processing.  Therefore such clauses contravene the law n°78-17 of 6 January 1978 on the processing of personal data.

    - The clauses which allow Amazon EU to send personal data to other companies for promotional offers, or co-branded or joint offerings

    These clause are contrary to Article L.121-20-5 of the consumer code which provides that: ?Direct canvassing by electronic mail is authorized if the recipient's contact details were obtained directly from him (?) in connection with a sale or the provision of services, if (i) such direct canvassing relates to similar products or services provided by the same natural person or legal entity and (ii) the recipient is expressly and unambiguously given an opportunity, via a simple means and at no cost, to oppose the use of his details?.

    Promotional offers are sent by Amazon EU ?on behalf of other businesses?, while canvassing should be authorized only for the goods or services provided by Amazon EU directly, in its capacity as company which obtained the personal data of the consumer.

    III. Marketplace program

    - The clause which provides for the application of the Laws of Luxemburg

    Article 17 of LCEN provides that the activity of electronic commerce is governed by the law of the Member State on which the e-merchant is established, subject to the common intention of the parties.

    The Court underlined that Amazon Services Europe, which for the www.amazon.fr website aims at consumers who reside mostly in France, would be unable to prove that the common intention of the parties would have been to choose the laws of Luxemburg in order to govern any dispute.

    In addition, Article 17 of the LCEN also specifies that a consumer, whose usual residence is in France, cannot be deprived from the protection of French laws. The Court therefore decided that the wording of the clause was contrary to Article 17 of LCEN.

    - The clauses which exonerate Amazon Services Europe from any liability in relation to the lawfulness of the items offered on the marketplace, or in the event of a lawsuit between participants

    As explained before, Amazon Services Europe in its capacity as hosting provider is liable according to Article 6.I of LCEN, from the moment it had knowledge of the unlawfulness of the contents posted in its platform. Therefore, the clause which provides for Amazon Services Europe's general exemption of liability is illegal.

    - The clause which imposes on the consumer to hold Amazon Services Europe harmless of any third party's claim as a result of the information provided by the consumer

    The Court considered that this clause lacked detail on the type of claim that Amazon Services Europe would be part of and that this created a significant imbalance to the detriment of the participant, for the consumer was unable to identify the nature and the scope of his/her undertaking to Amazon Services Europe.

    This clause was therefore declared unfair according to the aforementioned provisions of Article L.

    132-1 of the French consumer code.

    - The clause which authorizes Amazon Services Europe to terminate in its sole discretion the participation agreement

    Once again, the Court held that this clause created an imbalance between the obligations of the parties, for the seller could be expelled from the Marketplace, without any justification, and without giving to the seller any opportunity to protest.

    - The clauses which authorize Amazon Services Europe to impose transactions limits, to postpone the payment of the price to the seller, without specification on the delay or the purposes, or to refuse or deposit the payment of the price to the seller, or to reimburse the buyer without justification

    According to the Court, these clauses lack details in order to allow the consumer to identify clearly the nature and scope of the obligation he/she is subscribing. They are also sorely understandable by the consumer. The Court therefore decided that they were unfair according to the Consumer code.

    Conclusion

    The ruling of the Paris Court is very protective of the interest of the consumers and triggers numerous questions: is it still possible for a professional to limit its contractual liability vis-à-vis French consumers? It is still possible to avoid French law as applicable law? Etc.