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Some social media terms of service probably unenforceable

06 April 2017

A New Zealand branch of the International Social Media Association (ISMA) has launched with an analysis of the Terms of Service of 10 social media platforms available in New Zealand.

The analysis shows that ISMA believes the disclaimers of all 10 platforms could not be enforced against a New Zealand user of the service under New Zealand law. The time and money limitations on claims of YouTube, Instagram and Tumblr are also seen as probably unenforceable.

A large number of the other terms are stated to be "problematic" or possibly unenforceable under New Zealand law.

"This uncertainty arises either because the outcome depends on the circumstances on each individual case or on the discretion of the courts or other entities, or because the law is yet to be tested in relation to social media platforms," ISMA says.

Areas where all 10 platforms' terms are "problematic" are amendments, minimum age, limitation of liability, law, jurisdictions and arbitration notice, and third party content or links.

Platforms included in the analysis

The 10 platforms are YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, and Reddit.

Recitals and entry into agreement

ISMA says most users agree to terms and conditions without reading them or thinking that a legal dispute will actually arise. It says the main issue in relation to the recitals arises where the scope of the agreement is unclear, as this may create issues in establishing the contractual intent in areas that are not clearly government by the terms.

Enforceable: YouTube, LinkedIn, Twitter, Instagram, Snapchat, Tumblr, Pinterest, Reddit.

Problematic: Facebook, Google+.

Parties and acceptance

ISMA says the primary issue that arose was where the terms of service apply to visitors to a social media platform who have not come across the terms (ie, they haver not made an account). In this case, its says, it may be held that a visitor cannot be bound by the terms despite their use of the site as they were unaware that use of the site constituted acceptance of the terms.

Enforceable: YouTube, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Problematic: LinkedIn.

Amendments

ISMA says the standard principle surrounding amendments to contracts is that it must be supported by valid consideration from each side. Under this principle, the amendment provisions in each of the terms would not be enforceable unless consideration had been provided by both parties, which in practice is not usually the case. However, it notes the Court of Appeal decision in Antons Trawling Co Ltd v Smith [2003] 2 NZLR 23 that consideration is not necessary for a variation where it is clear that the parties intended to be bound by variations to the agreement and no policy reasons apply to not enforce the agreement. It says it is unclear whether this would apply to agreements such as the terms of a social media platform.

Problematic: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Termination

ISMA says if the unfair contract terms in the Fair Trading Act 1986 apply, the contract may be declared an unfair term which cannot be enforced against consumers. Terms that may be considered unfair include those which permit one party but not the other to terminate the contract, or allow one party to unilaterally determine if the contract has been breached or to interpret its meaning "and such terms are included in the majority of the social media platforms' terms".

Enforceable: LinkedIn.

Problematic: YouTube, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Minimum Age

ISMA says where the terms state that a user must be at least 13 years old to use the service, there may be enforceability issues due to section 6 of the Minors' Contracts Act 1969. It says some of the terms avoid this issue by requiring that the user be able to enter a legally binding contract. This would mean that New Zealand users between 13 and 18 would not be able to use the services, cutting out a large proportion of the users of most social media platforms.

Problematic: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Registration and account security

ISMA says no obvious issues arise where the social media platforms require or allow users to make an account on the service. As they are not public agencies they will not be bound by the privacy principles outlined in the Privacy Act 1993 where personal information is provided to register for an account. However, breach of these principles could be the subject of a complaint to the Privacy Commissioner.

Enforceable: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Commitment when using the platform

ISMA says there do not appear to be any issues with prescribing conduct and content, and the prohibitions largely align with restrictions found in New Zealand law, such as prohibitions of hate speech and defamatory statements.

Enforceable: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Ownership of IP content

ISMA says each of the social media platforms allows users to upload content onto the platforms, and provide either that the user retains any rights they have in the content, of that the user owns that content. "Rather than claiming ownership of this content, the social media platforms receive a licence to use the uploaded content liberally." It says while this will largely be enforceble, there is an anomoly where IP content is uploaded by someone other than the owner of the relevant IP rights, and the term purports to grant ownership of that content to the user: "Where this occurs, the term will not be enforceable because the owner of those IP rights is the only person entitled to grant ownership rights, so the social media platform is purporting to grant ownership rights where they are not entitled to do so." ISMA says inclusion of a term requiring that users have rights to the content that they will post will not necessarily pervent this unenforceability, as users may post content that infringes IP rights unknowingly.

Enforceable: YouTube, Twitter, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Problematic: LinkedIn, Facebook.

Deletion of IP Content and remaining copies

Copyright infringement poses the greatest risk for the social media platforms after deletion of content or an account, ISMA says. "Under the Copyright Act 1994, simply storing a copyright work without licence from the copyright owner to do so can constitute infringement by copying." ISMA also points to possible problems with the Trade Marks Act 2002 and the Patents Act 2013. It says privacy may be an issue where the content uploaded contains personal information about a user. Storing it in breach of the privacy principles could leave the social media platform open to a complaint to the Privacy Commmissioner.

Enforceable: LinkedIn, Twitter.

Problematic: YouTube, Facebook, Instagram, Google+, Snapchat, Tumblr, Reddit.

Not enforceable: Pinterest.

Modification or use of content

Parties are largely free to contract however they choose, so an agreement providing a licence to use a party's content will usually be enforceable in New Zealand. "Given that the nature of social media platforms is to share and distribute content between users, it is understandable why these licences are broadly written," ISMA says. It says issues arise when the content is subject to IP rights and is uploaded by someone other than the owner of those IP rights, as the user is purporting to grant a licence to use and modify the content when they are not entitled to do so.

Enforceable: YouTube, LinkedIn, Twitter, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Problematic: Facebook.

System for claiming violation of IP rights

ISMA says each of the social media platforms follows the takedown process in the United States' Digital Millennium Copyright Act 1998 when dealing with reports that copyright has been infringed. This provides that an internet service provider will not be liable for copyright infringement where it is a mere conduit of the infringing content. ISMA says this closely aligns with New Zealand law regarding internet service providers' liability for copyright infringement, and the terms will be enforceable.

Enforceable: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Disclaimers

ISMA says each of the terms provides wide disclaimers, which is permissible in the United States where the companies are based. However, this is not permitted in all jurisdictions, it says, which many of the platforms acknowledge with a statement that the disclaimer is "to the extent allowed under the applicable law". ISMA says New Zealand is one of these jurisdictions as the Consumer Guarantees Act 1993 restricts the ability for companies to contract out of certain consumer protections. Where this Act is held to apply to the use of social media platforms, any term that attempts to contract out of certain protections, such as implied warranties as to quality, will not be enforceable.

Not enforceable: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Limitation of liability

ISMA says if the Consumer Guarantees Act 1993 is held to apply to the use of social media platforms, the terms cannot purport to contract out of or limit liability for negligence. "If it does not apply however, the platform may contract out of liability for negligence with an express and unambiguous statement." ISMA says a term may also be unenforceable against consumers if it is declared to be an unfair term under the Fair Trading Act 1986. That Act also provides that parties cannot limit liability for misrepresentation, so a term which purports to do so will not be enforceable under New Zealand law.

Problematic: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Law, jurisdiction and arbitration notice

Jurisdiction clauses will be enforceable in most circumstances, but New Zealand courts have discretion to exercise their jurisdiction over a dispute where it is deemed necessary. "It is possible that if the outcome in the other jurisdiction would be substantively unfair under New Zealand law, the courts may exercise this discretion."

Problematic: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Time and money limitations on claims

ISMA says terms which limit the time in which a claim can be made or the amount that can be claimed for must be clearly drafted as any ambiguity in the term will be read against the party seeking to rely on it. "Clearly drafted terms will be enforceable against businesses and, where the terms are fair, against consumers."  However, if declared unfair under the Fair Trading Act 1986, a term will be unenforceable against consumers. ISMA says a term that imposes a reasonable monetary  limit is likely to be fair, but conversely, a term that limits claims to nominal amounts would likely be unfair.

Problematic: LinkedIn, Twitter, Facebook, Google+, Snapchat, Pinterest, Reddit.

Not enforceable: YouTube, Instagram, Tumblr.

Not applicable: Reddit.

Provisions regarding advertisement

ISMA says the main issue regarding advertisement is misrepresentation under the Fair Trading Act 1986. It says a social media platform may be liable for misrepresentation in an advertisement unless it was due to the act of another person, and the platform took reasonable precautions to avoid misrepresentation.

Enforceable: YouTube, LinkedIn, Twitter, Google+, Snapchat, Tumblr, Pinterest.

Problematic: Facebook, Instagram, Reddit.

Third party content or links

Each of the social media platforms' terms limit liability for content or links posted by third parties on their platforms. ISMA says this will usually be enforceable, although if a term is declared unfair under the Fair Trading Act 1986 - for example by limiting one party's right to sue another - it could not be enforced against a consumer.

Enforceable: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Brand guidelines

The guidelines on how a user may use the social media platforms' brands and logos will be enforceable as the owner of IP rights has an exclusive right to license those rights, says ISMA. Most of the logos and brands are registered trade marks in New Zealand, but where they are not, they will likely constitute a copyright work.

Enforceable: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest.

Problematic: Reddit.

Entire agreement/severability

ISMA says severability clauses and entire agreement clauses will likely be enforceable, unless a court considers that it would be reasonable for a user to contemplate that some other document or statement constitutes part of the agreement.

Enforceable: YouTube, LinkedIn, Twitter, Facebook, Instagram, Google+, Snapchat, Tumblr, Pinterest, Reddit.

Last updated on the 16th September 2019