Why localize US terms when entering the French consumer market: the example of social networks Terms & Conditions

When setting up a social network account (Facebook, Twitter, Google + etc.), the user must accept this service’s general terms and conditions. If not localised properly under French law, certain of these terms could be considered as abusive and the website could face penalties. In a recent case law decision, a French court ruled in March 2015 that the clause of a social network’ terms and conditions conferring exclusive jurisdiction to US courts for all litigating claims is abusive. This decision only dealt with the jurisdiction clause of a social network. 

However, the same reasoning could be applied to many standard terms of foreign websites offering online services in France, which, as such, are subject to extensive French consumer protection rules, including forbiddance for abusive or unfair terms.

In the court ruling dated March 2015, Facebook had disabled a user profile for showing the notorious picture of L’Origine du monde, painted by Gustave Courbet (which central feature is a woman’s genitalia). The user sued Facebook before a French court to have its account reactivated. Facebook raised the lack of jurisdiction of the French court arguing that the user agreed to the terms and conditions which provided for California courts. 

The Court ruled that the relationship between Facebook and the user is a business-to-consumer relationship where the user “has no power to negotiate the contractual clauses”. The contract is therefore subject to French consumer Code which defines as abusive those clauses which create a “significant imbalance between the rights and obligations of the Parties to the agreement to the detriment of the consumer”. This Code also sets a list of clauses which are abusive per se and therefore not enforceable. Amongst this list, a clause which excludes or hinders the right for a consumer to obtain remedy in court is considered as an abusive clause. 

The court noted that such clause “compelled the user to bring its case before a very remote court” and to incur “heavy costs out of proportion with the outcome”. On the contrary, the Court mentioned that Facebook has an affiliate in France with “available financial resources allowing it without difficulty to ensure its legal representation and defense in France”. 

This case is a good example of consumers’ awareness of their legal rights and of the increased scrutiny on ToUs for consumer services offered by US based companies. The EU Directive on Consumer Rights has been fully implemented in France more than a year ago by the Hamon Act in March 2014, which, as a specific measure for France, also introduced a consumer class action regime for the first time into the French legal system. 

Other examples of abusive clauses sets forth by French consumer Code also include terms which:

• permit price increases without giving consumers the right to cancel the contract;
• deny consumers full redress if things go wrong; release the business from having to perform its obligations;
• entitle the service to discretionarily modify the terms, or the characteristics of products/services, after they’ve been agreed.

French law also requires that those terms be expressed in ‘plain and intelligible’ language’, i.e., for the average consumer. Thus legal and technical jargon, poor translation, statutory references and extensive cross-referencing should all be avoided. 

The mere fact to include abusive terms in consumer terms and conditions is punishable by up to 15.000 Euros administrative fine per occurrence. Sanctions for unfair practices could also go up to 1,500,000 € (or 10% or annual turnover) and up to two years imprisonments. But more than the fine, the real damage for any business found guilty is the bad press surrounding such actions, as the media headlines such stories heavily. 

Amongst recent actions against foreign companies (mainly US), in Spring 2014 a French consumer organization (UFC Que Choisir) launched an action against Facebook, Twitter and Google to force them to modify their terms and conditions, including their data privacy policy, deemed “non-readable due to the numerous hyperlinks” and allowing them to have complete control over the user’s data. Earlier in 2014, Google has been sentenced by French data protection authority to a record 150,000 euros fine for non-compliance with data privacy requirements. 

These cases illustrate a growing trend in France, and the growing scrutiny by consumers, consumer organizations, and consumer protection and other compliance government agencies, which cannot be ignored and requires that more care and attention be given to full and proper localization of terms and conditions prior to launch.