Changing Your Terms and Conditions? If So, Your Company Must Provide Express Notice to Consumers

The Ninth Circuit recently reminded companies that they must provide notice to consumers when they change their terms and conditions, even where original terms state that they are subject to change at-will and at any time (i.e. the original contract contains a “change-of-terms” provision). Without express notice to the consumer, any change is unenforceable. 

In Stover v. Experian Holdings, Inc., No. 19-55204, 2020 WL 6156048 (9th Cir. Oct. 21, 2020), a consumer expressly agreed to Experian’s terms as they existed in 2014. Those terms required her to arbitrate all claims arising out of the service she purchased and contained a change-of-terms provision stating that she would be consenting to “the then current terms” (i.e. new or different terms added/changed after 2014) each time she accessed Experian’s website. The consumer accessed the website in 2018. At that time, the terms had changed to exclude certain disputes from arbitration. The consumer argued that her dispute should not be subject to arbitration pursuant to the 2018 terms.

The Ninth Circuit held that Experian’s 2014 terms applied because the consumer did not allege that she had received notice of the changes to the 2018 version of the terms. The court reasoned that consumers have no obligation to investigate whether the contract drafter modified the contract because to rule otherwise would undermine the contract principle requiring a “meeting of the minds” or mutual assent. 

Even if the original contract has a change-of-terms provision, allowing for subsequent changes at-will, consumers are not bound absent express notice to the consumer of the change of terms. Accordingly, the 2018 terms did not apply because the consumer did not have notice of them. Therefore Experian could compel arbitration of her claims. 

If a company modifies its terms and conditions with existing consumers, even with an express change-of-terms clause allowing the company to change its terms at-will, it must provide notice to the consumer in order for the consumer to be bound by the new or changed terms. Depending on its circumstances, a company may consider emails, splash pages, or other methods to notify consumers of changes to its terms. 

But, to be clear, notice must be provided in such a way that the consumer expressly consents to the new terms in order to continue receiving whatever services the company is providing. To navigate the terms of their contracts and evaluate appropriate and effective notification strategies, companies should seek the guidance of an attorney.