​Legal experts put software and online privacy agreements to the test

One of Australia’s top communications law think tanks has challenged the legality of online service provider privacy agreements with consumers in a new report released yesterday.

The report, prepared by UTS’ Communications Law Centre (CLC) and funded by the Australian Communications Consumer Action Network (ACCAN), found that such agreements have the potential to be interpreted as unfair, unconscionable or misleading under domestic consumer laws.

The report, which was launched at ACCAN’s annual conference yesterday provided an exhaustive analysis of the legal status of so-called “clickwrap” and “browserwrap” methods for obtaining consumers’ consent to collect and use their personal information.

The primary difference between the two methods of obtaining consent is that the latter requires a consumer to visit a web location or page to discover a service provider’s privacy terms while the latter requires consumers to mouse ‘click’ a button or tick a box to agree to a set of terms before using piece of software — typically during the installation process — before using it.

The authors of the report explored myriad legal dimensions of the use of such agreements and contracts, and speculated that an Australian court may find that that lack of time given to consumers to review these lengthy documents could be construed as unconscionable.

The report’s authors were also concerned that a lack of alternative services for consumers may create a power imbalance that would lead to a state in which contractual terms could be construed as unconscionable.

Equally, unilateral ability on the part of the provider to vary the terms of these contracts and agreement in combination with the use of excessively complex legalise may expose such contracts to claims of unfairness.

The reports’ authors were particularly concerned about contracts that sought “informed consent” for consumers to allow their data to be moved offshore to avoid liability under section 8 of the Australian Privacy Principles or APPs.

APP 8 requires service providers not to move information offshore and expose it to the third party providers unless they’re willing to guarantee that those third parties handle the information in a manner consistent with Australia’s APPs overall.

The report’s authors also explored whether blanket statements providers’ made with respect to privacy could leave them open to subject to challenge under Australian Consumer Law as misleading, particularly with respect to section 18 of the legislation. Section 18 deals with non-compliance with privacy policies.

“As ‘puffery’ may in some circumstances be conduct falling under section 18, it should be queried whether ubiquitous statements such as ‘We take your privacy seriously’ and ‘We do everything possible to protect your personal information’ (when neither is a reflection of reality) might in certain circumstances be misleading or deceptive,” the report’s authors wrote.

The CLC recommended further research into consumer behaviour when confronting privacy options and controls. It also recommended that consumers be given greater control over their privacy by being better informed about how their information is sold, aggregated and analysed.

It also warned against allowing providers to “bundle consent” in lengthy documents for which consumers may be opaque and excessively complex.