E*Trade’s Online Contract May Not Be Binding

A federal court in California recently denied a motion to dismiss filed by E*Trade in a “putative” class action. The action is “putative” because the court has not yet certified the class. E*Trade was trying to nip the whole thing in the bud by contending there is no real underlying dispute for the court to even consider. The case involves E*Trade’s practice of unilaterally adjusting account fees (guess which direction) it charges customers. At least some of those customers are unhappy enough about that practice to seek relief through class action litigation. E*Trade contends that it’s online customer agreement allows it to unilaterally adjust the fees by posting notice on its Web site. The court was not convinced, at least at this early stage in the proceedings. It found that the language that supposedly allowed E*Trade to adjust the fees was potentially subject to more than one interpretation, which meant it could not grant the motion without gathering more information on that issue through discovery. The court also questioned whether E*Trade’s notice procedure was adequate. The court deemed the procedure – that put the burden on the customer to check the Web site for any changes – “problematic.” There is an important point to consider here. The fact that the court is looking at the language of the contract means that it is not invalid just because it is unilateral. Lots of courts have upheld terms set out in clickwrap agreements and on Web sites. Those terms you routinely blow by on your way to the transaction may look like mumbo jumbo, but in many cases, they are binding. So depending on what you’re committing to, you might want to actually read them. And so the case lives. Which means that the court will need to decide if it can proceed as a class action. I wonder if this guy will be part of the class: