9th Cir. Gives No Credit to Claim that Experian’s Updated Site Terms Apply


A recent Ninth Circuit Court of Appeals decision involving mega credit reporting company Experian reminds us that online businesses should be careful of relying on unilateral “change-of-terms” clauses in their online terms of use/service/and conditions.

Stover Background

In Stover v. Experian Holdings, Inc. (No. 19-55204, 9th Cir. 2020), Stover purchased an “Experian Credit Score” service from the credit reporting firm back in 2014. In doing so, she was required to accept Experian’s terms and conditions, which contained a number of provisions in which she agreed to waive her right to be part of a class action and to arbitrate all disputes “to the fullest extent permitted by law”. Under these 2014 terms, Stover further agreed that each time she accessed the “Product Website”, she would be manifesting assent to the most current version of the terms.

Stover cancelled her credit score service a month later, only to re-access the website some four years later in 2018, just prior to the filing of her class action lawsuit in Central District of California for violation of certain provisions of the Fair Credit Reporting Act (15 U.S.C. § 1681g(f)(7)(A)), in addition to the unfair competition laws of California and Florida. Experian moved to compel arbitration under the 2014 terms, which the district court granted.

In an unusual twist for these types of cases, appellant/Plaintiff/Stover was the one arguing that the newer, 2018 terms and conditions should apply, while appellee/Defendant/Experian was arguing just the opposite; that the older 2014 terms should be enforced.

In looking at the question of whether a single website visit by a user years after assent to a contract containing a “change of terms” provision is enough to bind the parties to terms in a subsequently revised version of that same contract but where the visitor is unaware of such changes, Judge Milan D. Smith Jr., wrote:

[I]n order for changes in terms to be binding pursuant to a change-of-terms provision in the original contract, both parties to the contract—not just the drafting party—must have notice of the change in contract terms.

So what lessons can e-commerce and online services businesses take away from the Stover decision?

For one thing, relying on a clause in your online agreements that says something like: “your continued access or use of [website, app, etc.] constitutes your acceptance of the terms as updated” will not probably fly.

This could be especially problematic when things hit the fan, and you and your company are hoping to rely on a specific provision in your terms (compulsory arbitration of disputes, anyone?).

Lessons for E-Commerce and Providers of Online Services from Stover

For your new customers or members of your e-commerce business or service, or where a customer completes a new transaction each time, it’s fairly straightforward; make sure the user is properly presented with your up to date terms in the initial registration or check out flow.

For existing customers, Stover essentially reminds us that more work is going to have to be put in to satisfy the “notice” aspect.

Some of the solutions we have worked with our e-commerce and online business clients are specific alerts to the user at the next sign in, letting them know that your terms (or, say, privacy policy) have been updated and can be viewed by clicking on a link together with a prompt that, by continuing on with sign-in, they agree to be bound by them.

Next consider, either internally or via your CRM, an automated e-mail notifying the existing customer of your changed terms, which may even include a brief summary of the revisions, in addition to links to the updated terms or policies themselves. (By the way, although such e-mails would almost certainly be considered “transactional”, it’s always a good idea to make sure that their format is CAN-SPAM compliant).

Lastly, it hopefully goes without saying that all of the recommended practices mentioned should be done in a way that is recorded and which your company would be able to call up in case you had to.

Image “Credit report key with card” courtesy of QuoteInspector.com under license CC BY-ND 4.0 (Image cropped)

Ben Bhandhusavee is the Managing Attorney for BHANDLAW, PLLC, a startup, technology, and e-commerce law practice advising founders and management teams on company startup, corporate and technology transactions, e-commerce, as well as Internet privacy concerns. The firm serves corporate and individual clients throughout Arizona, the United States, and internationally. Our offices are conveniently located along the Camelback corridor in Phoenix’s financial district. For more information about our E-Commerce and Internet Law practice, feel free to reach out using the contact form on the right or call us at (602) 222-5542 to schedule a meeting. Connect with Ben on LinkedIn or Avvo.