9th Circuit Holds Changes To Customer Contracts Are Unenforceable Absent Notice And Consent

In a case of first impression, the 9^th Circuit recently held that a service provider cannot change the terms of its service contract with customers by merely posting the revised contract on its website. In order for contract changes to be enforceable, some form of notice to and consent from the customer is required.

In Douglas v. Talk America, Inc., No. 06-75424 (9^th Cir. July 17, 2007), Talk America acquired a long distance telephone service from AOL. After acquiring the service, Talk America made several changes to the customer service contract, including (1) additional service changes; (2) a class action waiver; (3) an arbitration clause; and (4) a choice of law provision pointing to New York Law. Talk America posted the revised contract on its website but did not notify customers, including Douglas, of the revised terms.