“I have read, understood and agree to… unfair treatment?”

9 July, 2010

Go to almost any website selling goods or services online, and at some point in the transaction process you are likely to find a statement along the following lines:

I confirm that I have read, understood and agree to the terms and conditions [link].

The FSA has released a guidance note (PDF) stating that, in their view, this declaration is “unfair” under the Unfair Terms in Consumer Contracts Regulations 1999 (“Unfair Terms Regulations”). As the FSA put it:

Firms should draft contracts in plain and intelligible language and must also give consumers a proper opportunity to read all the terms of the contract. Consumers should check the details of the contracts they enter into. But a contract term requiring consumers to declare that they have read and understood the terms of the contract is likely to be unfair because it binds customers to terms which, in practice, they may not have any real awareness of.

While this guidance relates specifically to financial services, it is consistent with the OFT’s guidance on consumer contracts generally. Online sellers, especially those dealing with consumers rather than business customers, should therefore consider wording along the lines of the FSA’s proposed alternative for such declarations. For an online seller this might read:

These are our standard terms and conditions [link] upon which we intend to rely. For your own benefit and protection you should read these terms carefully before signing them. If you do not understand any point please ask for further information.

Sellers should also ensure that they review their online consumer contracts carefully to ensure the terms themselves comply with the Unfair Terms Regulations. To assist in this, the OFT has produced a number of guidance documents. These include their Unfair Contract Terms Guidance (PDF) and its annexes giving specific examples of unfair terms (PDF), as well as specific guidance for a number of sectors.