Clickwrapped
Who respects your rights online?

Netflix has a very broad license with respect to any content that you contribute to the site. You grant Netflix the right to license to display, use and modify your content “in any media, software or technology of any kind”. Although these provisions cause us considerable concern in other contexts, Netflix is a video rental service. You may post the occasional review or comment on the site, but it is unlikely that you will contribute any personal or sensitive information.

Netflix can disclose information about you in three situations: (1) to respond to legal process, (2) to enforce the terms of use, (3) address illegal activities or security or technical issues, and (4) “protect against harm to the rights, property or safety of Netflix, its users or the public”. Although some of this language is unnecessarily broad, this provision is not unusual. Most of the companies surveyed have similar disclosure rights.

However, Netflix has run into trouble with the law on two occasions for disclosing information about its subscribers. In 2010, it was sued by a closeted lesbian who argued that someone could work out her sexual preferences by analyzing an anonymized dataset that Netflix had released as part of a contest. More recently, in July 2012, Netflix paid $9 million in a class action settlement for wrongfully retaining rental history information for people who have left the site.

Netflix has the right to change the Terms of Use at any time, with or without notice. It also has the right to terminate your account without notice “for any or no reason whatsoever”.

The Terms of Use contains a mandatory arbitration clause. This means that you give up your right to sue Netflix in court. Any dispute must be resolved by means of binding arbitration. Although such clauses are becoming increasingly common, Paypal is the only other company in the survey that has adopted such a clause. Mandatory arbitration is dangerous because most consumers think that if they have a dispute with a merchant, they will have access to the judicial system and all of its rights and protections, such as bringing a class action, having their case heard by a judge, and the right to appeal. These rights do not exist in arbitration proceedings.