How Zappos’ User Agreement Failed In Court and Left Zappos Legally Naked (Forbes Cross-Post)
19 02 2013By Eric Goldman
In re Zappos.com Inc., Customer Data Security Breach Litigation, 2012 WL 4466660 (D. Nev. Sept. 27, 2012).
In January, Zappos (part of $AMZN) announced a massive data security breach affecting 24 million consumers. As typically happens in these situations, plaintiffs’ class action lawyers swarmed over Zappos for the breach, filing dozens of lawsuits. Zappos tried to send the lawsuits to arbitration based on an arbitration clause in its user agreement. Recently, a federal court struck down Zappos.com’s user agreement, denying Zappos’ arbitration request. This is an unfortunate ruling for Zappos, because its contract–now dead–would have been quite helpful in combating this high-profile and potentially very expensive data security breach lawsuit. More importantly, the mistakes Zappos made in its user agreement–though common throughout the Internet–are completely and easily avoidable. This post will make some suggestions for how to avoid Zappos’ fate.
Nomenclature note: “user agreement” synonyms include “terms of service”/”TOS,” “terms of use”/”TOU,” “end user license agreement”/”EULA,” and “member agreement.”
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