Evan Schuman's StorefrontBacktalk

OK. So what’s so bad about this?

The same contract also includes PayPal’s Electronic Communications Delivery Policy, which says:

You [the consumer] agree and consent to receive electronically all communications, agreements, documents, notices and disclosures (collectively, “Communications”) that we provide in connection with your PayPal account (“Account”) and your use of our services.

The Electronic Communications Delivery Policy also requires the consumer to have a computer, Internet connection, browser, Acrobat Reader, valid E-mail address and sufficient storage to retain communications or a printer to print them. So failing to have Acrobat Reader is a breach of the PayPal contract. And it’s also breach when opting out of the Electronic Communications policy by writing to PayPal or by clicking the “Contact Us” link on the Web site.

So PayPal wants to communicate with consumers electronically about everything. But if consumers want to preserve their rights, their can’t communicate with PayPal electronically.

It seems that PayPal is deliberately making it difficult for consumers to opt out, by making them jump through unnecessary hoops. Clearly, PayPal knows how to communicate electronically. Once consumers have logged into its system with a user ID and password, they have authenticated. The federal e-SIGN law 15 U.S.C. 7001 recognizes that an opt out using a click on signature is as legally binding as a written piece of paper. Indeed, it is likely that someone in San Jose will have to take these written opt-out documents and input them into a digital database so lawyers representing PayPal can check them whenever a lawsuit is filed to see if the plaintiff is on the opt-out list.

So if you don’t want to agree to a specific change to your rights, you have to send a signed snail-mail letter with specific information to PayPal at a specific address. But if PayPal wants to change its contract, all it has to do is post something online. Oh, and you have to send it within 30 days. Hardly seems, well, fair.

And that’s the point.

As a retailer engaged in E-Commerce and electronic contracting, sauce for the goose has to be sauce for the gander. It smacks of unfairness to say that we can communicate with you cheaply, effectively and electronically, but that you have to communicate with us in writing—and that writing has to be sent as ink on dead trees, with a stamp, to a particular address, and it also has to have a signature, or we can ignore it.

Ordinarily, parties to a contract can dictate the method of acceptance of a contract. I can say, “If you want to accept this contract, you must call me at xxx number before 4:00 PM Tuesday.” But this is different. PayPal is saying that you accept the new contract unless you do something—and something very specific. My personal opinion (and reasonable minds may stdiffer) is that, if PayPal was provided actual notice that a consumer wanted to opt out of the arbitration agreement and used a “normal” means of doing so (e.g., normal E-mail or electronic communications, not simply waving a banner saying, “I opt out”), PayPal would be hard pressed to argue that it had a right to ignore the opt out because it wasn’t sent the “right way.”

Look, changing online contracts in a way that’s fair to both parties is not easy. Consumers don’t read these things, or mostly don’t care about them until there’s a genuine dispute. Sending an E-mail (especially from E-mail addresses like PayPal, which are frequently used by spammers and destined for the E-mail trash heap) or posting on a Web site doesn’t really constitute the type of “meeting of the minds” that contract law looks for, even though these procedures are almost universally accepted by courts. So this is as much about fairness as it is about the law. If you are going to make a significant change to terms of service and if you are going to allow consumers to opt out, provide a reasonable way for them to do so—one that is similar to the way you normally communicate with them. An “opt-out” link, or a “contact us” link, or even an E-mail address to opt out would be reasonable. In 2012, requiring ink on dead trees with a scrawl probably is not.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.