Our starting point is the dataset produced by Lippi et al. (2019b), consisting of 50 relevant online consumer contracts, i.e., Terms of Service (ToS) of online platforms, analyzed by legal experts and marked in XML. The existing annotations identify eight different categories of unfair clauses. We doubled the size of the dataset, which now includes 100 ToS. At the same time, we narrowed down our focus to five categories. In particular, we selected the five most challenging categories and excluded from this study the remaining three categories, which were too easy, not particularly interesting, as they were almost always associated with the same rationale. We selected the new contracts among those offered by some of the major players in terms of global relevance, number of users, and time the service was established.Footnote 4
All the ToS we analyzed are standard terms available on the provider’s website for review by potential and current consumers. Indeed, as it will be noted below, many providers assert that rather than being an obligation on the service provider to notify their users regarding changes to the ToS and even to the service, consumers are required to review the ToS from time to time, visiting the website on a regular basis to check for any changes. The ToS collected in the dataset were gradually downloaded and analyzed over a period of eighteen months by four legal experts, with some follow-up review for the same services. Potentially unfair clauses were tagged using the guidelines described in Lippi et al. (2019b).
For the purpose of this study, we have conducted an in-depth analysis of the data set and we have created a novel structured corpus of different legal rationales, with regard to the following clauses:
liability exclusions and limitations (ltd);
the provider’s right to unilaterally remove consumer content from the service, including in-app purchases (cr);
the provider’s right to unilaterally terminate the contract (ter);
the provider’s right to unilaterally modify the contract and/or the service (ch); and
arbitration on disputes arising from the contract (a).
Interestingly, out of the 21,063 sentences in the corpus, 2346 sentences (11.1%) were labeled as containing a potentially or clearly unfair clause. We take it as a confirmation of the importance and potential impact of the analysis work we carried out.
The distribution of the different categories across the 100 documents is reported in Table 1. We shall notice the high frequency of some of the chosen categories within the dataset. Arbitration clauses are the most uncommon, and are found in 43 documents only. All other categories appear in at least 83 out of 100 documents. Limitation of liability and unilateral termination together represent more than half of all potentially unfair clauses.
We expected that detecting unfair clauses under these categories would be especially challenging. Not only the state-of-the-art classifier showed lower performance on such clauses in comparison to other categories (Lippi et al. 2019b), but it also turns out that each of these potentially unfair clause categories could be matched with several potentially unfair practices/legal rationales. The resulting one-to-many mapping of clauses to legal rationales will be detailed in the following sections. The link between rationales and clauses can be used to instruct the system so that it can provide an explanation for the unfairness of particular clauses.
Limitation of liability clauses
Service providers often dedicate a considerable portion of their ToS to disclaiming and limiting liabilities. Clauses falling under this category stipulate that the duty to pay damages is limited or excluded for certain kinds of losses and under certain conditions. Most of the circumstances under which these limitations are declared significantly affect the balance between the parties’ rights and obligations, and unlikely will pass the Directive’s unfairness test. In particular, clauses excluding liability for broad categories of losses or causes of them were marked as potentially unfair, including those containing blanket phrases like “to the fullest extent permissible by law”. Conversely, clauses meant to reduce, limit, or exclude the liability for physical injuries, intentional harm, or gross negligence were marked as clearly unfair (Lippi et al. 2019b; Micklitz et al. 2017).
The analysis of the dataset enabled us to identify 19 legal rationales for (potentially) unfair limitation of liability, which map different questionable circumstances under which the ToS reduce or exclude liability for losses or injuries. For each rationale we defined a corresponding identifier [ID], as shown in Table 2.
As noted above, each (potentially) unfair ltd clause within the data set may be relevant, and thus indexed with the corresponding IDs, under more than one legal rationale. As an example, consider the following clause taken from the Box terms of service (retrieved on August 2017) and classified as potentially unfair:
To the extent not prohibited by law, in no event will Box, its affiliates resellers, officers, employees, agents, suppliers or licensors be liable for: any direct, incidental, special, punitive, cover or consequential damages (including, without limitation, damages for lost profits, revenue, goodwill, use or content) however caused, under any theory of liability, including, without limitation, contract, tort, warranty, negligence or otherwise, even if Box has been advised as to the possibility of such damages.
The clause above, to the extent not prohibited by law, limits the provider’s liability by kind of damages, i.e., broad category of losses (e.g. loss of data, economic loss and loss of reputation); by standard of care, since it states that the provider will never be liable even in case of negligence and awareness of the possibility of damages; by causal link (e.g. special, incidental and consequential damages) as well as by any liability theory. As a consequence, the clause has been linked to the following identifiers: extent, anydamage, reputation, dataloss, ecoloss, awareness, liabtheories.
As a further example, consider the following clause taken from the Endomondo terms of service (retrieved on May 2018) and classified as clearly unfair:
Except as otherwise set out in these Terms, and to the maximum extent permitted by applicable law, we are not responsible or liable, either directly or indirectly, for any injuries or damages that are sustained from your physical activities or your use of, or inability to use, any Services or features of the Services, including any Content or activities that you access or learn about through our Services (e.g., a Third-Party Activity such as a yoga class), even if caused in whole or part by the action, inaction or negligence of Under Armour or by the action, inaction or negligence of others.
To the maximum extent permitted by the law, the clause above limits the service provider’s liability by the causal link with broad categories of potential damages (i.e., to encompass direct and/or indirect damages), by cause (i.e., service interruption and/or unavailability, third party actions and content published, stored, and processed within the service), and by kind, in particular for personal injury, resulting from an act or an omission of the supplier. Thus, it has been linked to the following identifiers: extent, anydamage, injury, thirdparty, content, discontinuance.
Content removal clauses give the provider a right to modify and/or delete user’s content, including in-app purchases, and sometimes specifies the conditions under which the service provider may do so. As in the case of unilateral termination, clauses that indicate conditions for content removal were marked as potentially unfair, whereas clauses stipulating that the service provider may remove content in his full discretion, and/or at any time for any or no reasons and/or without notice nor possibility to retrieve the content were marked as clearly unfair.
Under this category, we identified 17 legal rationales, shown in Table 3.
Each (potentially) unfair clause falling under the content removal category has been indexed with one or more identifiers of rationales. Consider, for instance, the following examples taken from the terms of service of TikTok (retrieved on October 2018) and Pokemon GO (retrieved on July 2016):
In addition, we have the right - but not the obligation - in our sole discretion to remove, disallow, block or delete any User Content (i) that we consider to violate these Terms, or (ii) in response to complaints from other users or third parties, with or without notice and without any liability to you.
Niantic further reserves the right to remove any User Content from the Services at any time and without notice and for any reason.
The first clause above, previously classified as potentially unfair, has been linked to the following IDs: termviolation, complaint, nonotice, tpright. Coversely, the second clause, previously classified as clearly unfair, has been linked to the IDs IDs: nonotice, fulldiscretion.
Such practices they would have no means to influence their content.
The unilateral termination clause gives the provider the right to suspend and/or terminate the service and/or the contract, and sometimes details the circumstances under which the provider claims to have a right to do so. From the consumer’s perspective, a situation where the agreement may be dissolved at any time and for any reason could seriously undermine the whole purpose of entering into the contract. These clauses may skew the balance of power between the parties and be considered (potentially) unfair whenever the consumer has a reasonable interest in preserving the contract’s longevity, given the foreseeably invested time and effort in the services, e.g., by importing and storing digital content. This is all the more true if the trader does not provide a reasonably long notice period allowing the consumer to migrate to another service (e.g., withdrawing and transferring all the digital content elsewhere).
Unilateral termination clauses that specify reasons for termination were marked as potentially unfair, whereas clauses stipulating that the service provider may suspend or terminate the service at any time for any or no reasons and/or without notice were marked as clearly unfair. Under this (potentially) unfair clause category, we identified 28 different legal rationales (Table 4).
As examples, consider the following clauses, taken from the DeviantArt (effective date not available) and Academia (retrieved on May 2017) terms of service:
Furthermore, you acknowledge that DeviantArt reserves the right to terminate or suspend accounts that are inactive, in DeviantArt’s sole discretion, for an extended period of time (thus deleting or suspending access to your Content)
Academia.edu reserves the right, at its sole discretion, to discontinue or terminate the Site and Services and to terminate these Terms, at any time and without prior notice.
The first clause above, previously classified as potentially unfair, has been linked to the dormant ID, since it states that the service provider will suspend or terminate apparently dormant accounts, also deleting or suspending access to consumers’ digital contents. Conversely, the second clause was previously classified as clearly unfair and it has been linked to the IDs no_grounds, no_notice. since the service provider claims the right to unilaterally terminate both the contract and the service without prior notice and grounds for termination are completely missing.
Under this category, we identified 7 different legal rationales, as reported in Table 5, mapping the different circumstances under which service providers claim their right to unilaterally amend and modify the terms of service and/or the service. Unilateral change clauses were always considered as potentially unfair, since the ECJ has not yet issued a judgment in this regard, though the Annex to the Directive contains several examples supporting such a qualification. Unilateral change clauses are particularly worrisome in cases where the proposed amendment significantly impact the consumers’ rights, thus creating a disproportionate balance between the parties. This is particularly true whenever consumers are either not given any opt-out options, where no consent to the new terms is requested, or where no notification to the consumers is given.
As relevant examples, consider the following clauses taken from the Academia (retrieved on May 2017) and Endomondo (retrieved on January 2016) terms of service:
Academia.edu reserves the right, at its sole discretion, to modify the Site, Services and these Terms, at any time and without prior notice.
With new products, services, and features launching all the time, we need the flexibility to make changes, impose limits, and occasionally suspend or terminate certain offerings.
The first clause above is representative of the largest group of the unilateral change clauses, stating that the provider has the right for unilateral change of the contract and/or the services and/or the provided goods and/or features, for any reason, at its full discretion and at any time and without notice. Thus, it has been linked to the following IDs: anyreason, nowarning. The second clause, stating that the service provider has the right to make generic unilateral changes to maintain a level of flexibility, has been linked to the ID update.
The arbitration clause can be considered as a kind of forum selection clause, since it requires or allows the parties to resolve their disputes through an arbitration process, before the case could go to court. However, such a clause may or may not specify that arbitration should occur within a specific jurisdiction. While clauses defining arbitration as fully optional has been marked as clearly fair, those stipulating that the arbitration should (1) take place in a state other than the state of consumer’s residence and/or (2) be based not on law but on arbiter’s discretion were marked as clearly unfair. In every other case, the arbitration clause was considered as potentially unfair.
Under this category, we identified 8 legal rationales, as reported in Table 6.
As examples, consider the following clauses taken from the Airbnb (retrieved on November 2019) and Grindr (retrieved on July 2018) terms of service:
By accepting these Terms of Service, you agree to be bound by this arbitration clause and class action waiver.
Any Covered Dispute Matter must be asserted individually in binding arbitration administered by the American Arbitration Association (AAA) in accordance with its Consumer Arbitration Rules (including utilizing desk, phone or video conference proceedings where appropriate and permitted to mitigate costs of travel).
The first clause above, previously classified as potentially unfair, has been linked to the consent_tos identifier, since it states that the agreement to the Terms of Service is specifically treated as consent to the arbitration clause. Conversely, the second clause was previously classified as clearly unfair and it has been linked to the following IDs: arb_obligatory, extralegal_rules since it states that all disputes must be resolved through arbitration, and the consumer is mandatorily subject to rules on dispute resolution not covered by law, i.e. Consumer Arbitration Rules by the American Arbitration Association (AAA).