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California Class Action Against Skype Arises From ‘Fine Print’

5 Nov, 2013 By: Gregory J. Sater


A class action against Skype Inc. that had been dismissed previously by a trial judge has been revived by a California Court of Appeals decision. The ruling is worth knowing about if you’re a direct-to-consumer marketer and you make disclosures in your “fine print.”

Plaintiff Melissa Chapman went to Skype’s website and bought a subscription to Skype’s “Unlimited US & Canada” calling plan. She alleged that, in doing so, she believed that there would be no limit on either the number of minutes she could use or the number of calls she could make because the calling plan was called “Unlimited.”

However, on the Web page advertising the plan, there was a footnote symbol after the word “Unlimited.” That footnote symbol referenced a link that could be found at the bottom of the page, which said – in a linked small font: “A fair usage policy applies.” Clicking on that link would lead to a Web page containing a “Fair Usage Policy” in which Skype disclosed that the calling plan allowed six hours per day, 10,000 minutes per month, and 50 telephone numbers called per day; anyone calling more often than that would be charged “normal rates and connection fees.”

The plaintiff had clicked a linked box on the website affirming, “I agree to the Skype Terms of Service.” That link led to the terms of service, which again said that all subscriptions were subject to Skype’s fair usage policy and provided a link to the policy. The plaintiff claimed, however, that she never noticed this language at the bottom of the page, which referenced the “fair usage policy” and had never read any such policy.

As noted above, the trial court dismissed the case, finding that the footnote referencing Skype’s fair usage policy was “clear and conspicuous” and that therefore this plaintiff had actual notice of the terms before she agreed to sign up. But the appeals court saw things differently, ruling that the case should not have been dismissed and that it would be an appropriate case to send to a jury, because a reasonable jury might conclude that ordinary consumers would interpret the “Unlimited US & Canada” calling plan as being unlimited despite what was said in the Skype fair usage policy because they might not notice it.

The decision serves as a reminder to marketers everywhere that where they place their online disclosures – and how they label the hyperlinks that are supposed to lead consumers to those disclosures – are very important matters to consider. This is one of the key points made by the Federal Trade Commission (FTC) in its recently issued Dot-com Disclosure Guide.

Here, Skype had a hyperlink, but it was labeled a “fair usage policy,” which the court found to be unclear. The court explained: “A reasonable interpretation of the words ‘fair usage policy’ is that they suggest a policy to protect against misuse of the service provided. They do not necessarily suggest to an ordinary consumer that the ‘Unlimited’ plan is actually limited as to the number of minutes and number of calls. Those words therefore do not necessarily, and as a matter of law, alert a reasonable consumer to the need to follow the link to learn the details of those limits.”

In other words, based on this court decision and the recent FTC Dot-com guidance, it would be prudent, whenever using a hyperlink to lead to a disclosure, to label that hyperlink with a title that clearly puts the consumer on notice about why he or she should be clicking on that link. The case also is a good reminder about what can happen if the name that you give to your product conveys something that you then have to try to “undo” with a disclosure: there always will be someone who claims they did not see your disclosure.

The next step for the Skype case? A jury of its peers.

Gregory J. Sater is a partner in Venable LLP‘s Advertising, Marketing and New Media Group. He can be reached via E-mail at gjsater@venable.com.


About the Author: Gregory J. Sater

Gregory J. Sater

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