The U.S. District Court for the Eastern District of New York held that Overstock.com’s terms and conditions were not enforceable against its customers who did not actually read the terms. Plaintiff purchased a vacuum cleaner from Web retailer Overstock.com, and when she returned the item, she was charged a $30 restocking fee. The Overstock.com Web site contains a link at the bottom of the page labeled “Terms and Conditions,” which govern use of the Web site and customer purchases and state that “Entering this site will constitute your acceptance of these Terms and Conditions.” Customers are not required to accept the Terms and Conditions when either entering the Web site or when completing a purchase. When plaintiff filed suit, Overstock.com attempted to enforce the arbitration provision in the Terms and Conditions. Overstock.com argued that all users of the Web site are advised of the company’s terms and conditions prior to entering the Web site. The court rejected that argument, finding that plaintiff lacked notice of the Terms and Conditions because the Web site did not prompt her to review the Terms and Conditions, nor was the link prominently displayed so as to provide reasonable notice of the existence of the Terms and Conditions.

TIP: Companies should prominently display a link to their terms and conditions or require click-through acceptance of the terms and conditions on their Web sites to ensure that the terms and conditions are enforceable against visitors and users of the Web sites.