The Perils of Online Shopping

Professor Michael Deturbide explains the jurisdictional pitfalls of online shopping.
The statistics are astonishing. Canadians spend over $18 billion on the purchase of online goods and services annually. During the 2014 Christmas holiday season, over 60% of all Canadians made an online purchase. It’s clear that consumers have embraced e-commerce, but it is equally obvious that many do not realize what they are acquiescing to when they click “I agree.”

Last November Professor Michael Deturbide presented a “mini-law school” session for the general public at the Schulich School of Law on the perils of online buying. “The word ‘perils’ might be a bit strong,” he says, as most online consumer transactions do flow smoothly. “However, when things go wrong, it’s not possible to get an immediate refund like you would at your local department store. The vendor may very well be in an entirely different country.”

Buried in the small print of most online agreements are clauses that likely bring the purchaser within the jurisdiction and apply its laws of another province, state, or country. Moreover, courts in Canada usually uphold these clauses…

The jurisdiction of an online consumer contract was one of the topics Professor Deturbide highlighted in his presentation. Buried in the small print of most online agreements are clauses that likely bring the purchaser within the jurisdiction of another province, state, or country and apply its laws. Moreover, courts in Canada usually uphold these clauses, stating that online purchasers have consented to contractual terms even if they are not red-flagged and are only found elsewhere on the seller’s web site.  “Before you click ‘I agree,’ you really need to read that small print,” says Professor Deturbide. “You might think twice about following through with your purchase.”  In some cases, the mere use of the website may imply that you have agreed to the terms that are accessible via a hyperlink. These “browse-wrap” agreements are now standard industry practice.  “If you see a ‘Terms of Use’ hyperlink at the bottom of a web page, in all likelihood you will be bound by those terms if you go through with a purchase, even if you don’t access the hyperlink.”

Most provincial consumer protection legislation in Canada has been amended to address some of the specific issues of online consumer purchases. For example, a consumer must be given an express opportunity to accept or decline a purchase and correct any errors immediately before finalizing the agreement. That is why websites that sell to consumers provide a summary of purchases before the contract is finalized. The consumer is also given the right to cancel an agreement in certain circumstances (for example, if the purchase is not delivered within 30 days). “Use a credit card, as opposed to a debit card, for online purchases,” says Professor Deturbide. “If there is a problem, consumer protection legislation often requires credit card companies to reverse the charges.”

Professor Deturbide plans to further address consumer protection issues in the context of electronic commerce through a project with Industry Canada. Some of the topics he will investigate include pre-contractual disclosure, “drip” pricing, and unilateral modification of contract terms.

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