I’m sure most parents have some concerns about what their kids get up to on the internet, but few will expect to lose £50,000 as result. However, this was precisely the scenario facing Colin Cochrane. Mr Cochrane subscribed to an online spread-betting bookmaker called Spreadex which allows users to bet on shares, stocks and commodity prices. Mr Cochrane set up and began using his account and made the mistake of showing his girlfriend’s son how the website worked. Later, having not been near a computer for a few days, Mr Cochrane was shocked to discover that costs of almost £50,000 had been incurred on his account. The account activity coincided with periods when his girlfriend’s son had been using the computer so it didn’t need Hercule Poirot to work out what had happened.
Spreadex pursued Mr Cochrane for the sums owed and rejected his explanation of events. The case reached the High Court who found that the key clause in the Spreadex Customer Agreement was unfair. The term of the Customer Agreement, which Mr Cochrane had to click to “view” and then click to “agree” to, stated that “Your password must be declared, together with your account number, when you wish to access your account. You will be deemed to have authorised all trading under your account number.”
The High Court found that the deemed consent of all trading under the account amounted to an unfair term under the Unfair Terms in Consumer Contracts Regulations 1999. The judge said that “It would have come close to a miracle if [Mr Cochrane] had read the second sentence of the Clause, let alone appreciated its purport or implications”, and that it was an “entirely inadequate” way to attempt to make the consumer liable for trades not authorised by him.
The High Court also found that there was an imbalance in the Customer Agreement between the risks undertaken by the Consumer (i.e. Mr Cochrane) and the obligations placed on Spreadex. As Spreadex took on no real obligations under the Service Agreement the Court actually held that no enforceable contract had been created in the first place.
While the specific facts of this case were unusual (£50,000 gambled away by a child for one), it brings into focus the need for businesses to make sure that their online terms are fair and be particularly cautious when attempting to impose any liability on consumers. It is also a reminder to all of us to properly log out of any online accounts we use if there are children in the house...