Amazon Kindles a row

23 October, 2012

Amazon have prompted something of an internet storm this week by cancelling a Norwegian customer’s account and wiping all her Kindle books.

It is now reported that the customer’s account has been restored by Amazon, but the incident has highlighted a point that is often overlooked as e-books grow in popularity. Contrary to popular belief, when you purchase a Kindle title on Amazon, you are not “buying a book”, but merely being given a licence to download and read that book, subject to Amazon’s Kindle License [sic] Agreement and Terms of Use.

Those terms are, on the face of it, unequivocal. If you breach the agreement, your rights under it immediately terminate, and Amazon can wipe your entire book collection without any refund:

 

Termination. Your rights under this Agreement will automatically terminate if you fail to comply with any term of this Agreement. In case of such termination, you must cease all use of the Software, and Amazon may immediately revoke your access to the Service or to Digital Content without refund of any fees. Amazons failure to insist upon or enforce your strict compliance with this Agreement will not constitute a waiver of any of its rights.

In the case of this Norwegian customer, Amazon’s only explanation was that her account was “directly related to another which has been previously closed for abuse of our policies”. Amazon refused to provide any further explanation as to what this other account may have been, or as to the “abuse” of its policies.

What if the customer had been living in the UK? Could Amazon act in a similarly draconian and unaccountable manner? As we can see, their terms of business would appear to allow this. However, could aggrieved consumer argue that EU consumer laws protect them from losing their previously paid-for content?

For these purposes, the main law in the UK is the Unfair Terms in Consumer Contracts Regulations 1999. These provide that:

 

A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.

 

An unfair term is unenforceable against a consumer. The OFT can also issue “stop now” notices requiring the trader to stop using the unfair term.

The OFT’s guidance on unfair terms gives examples of numerous occasions on which the OFT has held that provisions allowing traders to cancel contracts without giving a refund are unfair. So there would seem to be good grounds for arguing that Amazon’s termination provisions in its Kindle licence agreement are unfair.

The Unfair Terms in Consumer Contracts Regulations do not apply to terms which define “the main subject matter of the contract” (or the price payable). Amazon could try to argue that the “main subject matter” is, by nature, a limited licence that is capable of revocation. Looking at the OFT’s past practice as set out in its guidance, however, I suspect that they’d be given pretty short shrift. It’ll be interesting to see if this is ever tested – maybe someone should make a complaint to the OFT about it?

I also wonder whether this apparent imbalance between consumer perception (“I bought it, so I own it!”) and legal reality may become the subject of future consumer protection legislation, so that “one-time payment” licences for digital content are effectively made irrevocable in all but the most exceptional of circumstances.

Amazon’s actions in this case have led some people to say that they will be cracking the DRM on their Kindle books in order to protect them from future deletion by Amazon. Unfortunately, to do so is unlawful under s.297ZA Copyright, Designs and Patents Act 1988 (and can even be a criminal offence if done commercially). More to the point, circumventing the Kindle’s DRM is itself a breach of Amazon’s terms, potentially leading to termination of your account…

Update: this interesting post on the furore quotes Amazon’s PR as saying:

 

We would like to clarify our policy on this topic. Account status should not affect any customer’s ability to access their library. If any customer has trouble accessing their content, he or she should contact customer service for help. Thank you for your interest in Kindle.

Kindle users may or may not find that reassuring. The one observation I’d make is that this “policy” is not what Amazon’s terms and conditions say, and what happened to this customer seems more in line with the terms and conditions than with Amazon’s stated policy.