D1.2.4: A legal analysis of Terms of Use of Social Networking Sites, including a practical legal guide for users: ‘Rights & obligations in a social media environment’

19 dec 2013 /

Capture1The fact that Terms of Use are often not or not entirely read nor understood is not exclusively linked to SNS. It is a general phenomenon that relates to the behaviour of human beings when confronted with standard form agreements. However, the stickiness and network effects of SNS may reinforce the feeling that Terms of Use, however far-reaching they may be, are just ‘part of the deal’ as a SNS user.

This report aims to approach this finding from a contract law and consumer rights perspective and attempts to evaluate the validity of SNS Terms of Use based on the legal requirements that are imposed on both parties (provider and user) in existing contract and consumer law instruments.

In principle, contract law departs from the principle of freedom to contract, implying that parties are free to negotiate the rights and obligations of their contractual relationship. Yet, Terms of Use in a consumer context are often drafted unilaterally by the seller or provider, who is the stronger party, and are presented on a take-it-or-leave-it basis. This situation may tilt the interests in favour of the provider and result in a lower degree of protection for the user.

Our analysis of several provisions Terms of Use of SNS providers has shown that there is cause to be concerned about the imbalance between the SNS provider and its users. It is likely that certain clauses will not be upheld before European courts, based on consumer protection arguments. An important instrument in this regard is the Unfair Terms Directive which stipulates that a term is unfair when it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. Recently, the CJEU has provided clarification on the notions of ‘significant imbalance’ and ‘good faith’ in order to guide national courts when assessing contract terms. Furthermore, the CJEU has stressed that national judges have the obligation to rule on the potential unfairness of a term even if the consumer did not indicate this in his legal action.

We have also referred to the fact that SNS providers often offer their services for free, in the sense that users do not have to pay an actual fee or price (although they may ‘pay’ with other means, such as their personal data). We wonder, together with other scholars, whether this would justify a lower protection level for these kind of services compared to other contracts where consumers actually pay an amount of money. However, many questions arise in this context, which need further research. Can parallels be found with regard to other services that are offered ‘for free’ ? What about SNS providers that offer both free and paying services, such as LinkedIn, for instance? Should they use two different kinds of agreements, thus raising costs for the company?

Although we may assume that the potential (and partial) non-compliance of SNS Terms of Use with European principles of contract and consumer protection law is to an important extent caused by the divergences that exist between Europe and the United States, it is relevant to wonder whether global services that offer their services to so many users in the European Union should not make more of an effort to adhere to fundamental consumer protection principles. Although we recognise that this is a complex issue, given that SNS are offered through an inherently borderless medium, there is a valid concern that without efforts in this area consumer protection will be decreased to the lowest common denominator.

Of course, it would be unrealistic to expect from SNS providers, which are after all profit-oriented companies which operate on the basis of business principles, that they only take the interests of their consumers into account. However, aspiring to a better balance between the rights and obligations of both parties should be a realistic goal.

We have established that currently specific case-law is lacking in this area. As long as collective redress mechanisms are not available in all Member States of the European Union it can be expected that European users or consumers will not be inclined to bring large, powerful SNS providers to court, in order to establish clarity as to the validity and enforceability of the existing provisions. This means that, in the meantime, efforts should be undertaken to incentivise SNS providers to adopt more consumer-friendly Terms of Use (for instance by introducing co-regulatory systems), on the one hand, and to raise the awareness of users with regard to the content and possible implications of SNS Terms of Use, on the other hand.

Finally, the report also includes a practical legal guide for users.

You can download the report here.