Betfred – A reminder to ensure that consumer terms are reasonable and enforceable
In the recent 'Betfred' case, the High Court has signalled a warning to consumer facing brands to ensure that any attempts to exclude liability, through their standard terms and conditions, must be done with close regard to consumer rights law. This case is particularly relevant to companies in the gaming and gambling sector operating consumer focused businesses.
Exclusion clauses (to avoid payouts) enclosed in terms and conditions are to be clearly worded, properly incorporated and must be fair and transparent. Otherwise, these clauses run the risk of being found to be unenforceable.
The Consumer Rights Act 2015 creates a clear obligation for businesses to be even handed in their dealings with consumers and to actively consider their interests when trading with them. Crucially any legal terms which are considered to be unfair will not be in binding on consumers (i.e. they cannot be enforced).
Here lies the crux of the legal argument in Andrew Green v Petfre (Gibraltar) Limited (trading as Betfred). In order to prevent a pay-out of some £1.72 million in prize money from their online gaming platform to Mr Green, Betfred sought to rely on exclusion clauses (relating to pay out errors arising from game defects) purportedly incorporated into their terms and conditions.
In her judgment, Justice Foster DBE took into account the fundamental principles of contractual construction as well as specific requirements under the Consumer Rights Act 2015. In order to assess whether Betfred's exclusion clauses could apply under these circumstances the judge considered three essential questions:
- What did the clauses mean?
- How were the clauses incorporated into Betfred's terms and conditions?
- Was Betfred able to rely on the exclusion clauses?
The first step was to review the plain English meaning of Betfred's exclusion clauses. The exact analysis of the clauses was of course, fact-specific. However, the judge offered clear insight into the process that would be followed to interpret the meaning of the exclusion clauses. The interpretation must not be "strained" or "given an unnatural meaning".
The judge commented that Betfred's terms were "repetitive", with "absent or inconsistent" numbering in places and "typographical mistakes". The terms were unclear as to what a user was obliged to agree and this lent the judge to form to view that, on the face of it, they did not appear to be consumer-friendly.
In addition to specific consumer-focussed law, common law also requires that, if a condition in a set of printed terms is particularly onerous, the party wishing to rely on that condition must show that they fairly brought that condition to the other party's attention. In the Betfred case, the judge assessed that there had been inadequate signposting by Betfred and commented that the relevant clauses were often buried in unhelpfully presented, closely-typed paragraphs.
She opined that a player would be unlikely to spend significant portions of time looking through documentation that is repetitive and does not appear relevant. Further, it was "almost impossible" that Mr Green would have been reasonably aware that his contract with Betfred contained clauses that supported a refusal to pay his winnings in the relevant circumstances.
Reliance on the exclusion clauses
Under the Consumer Rights Act 2015, consumer-facing terms and notices must be transparent and fair.
The judge criticised Betfred's drafting for being "opaque and difficult" and not clear to the average, informed consumer. Betfred was also criticised for failing to properly signpost the relevant exclusion clauses.
As, on balance, Betfred's relevant clauses did not meet the statutory obligations of fairness outlined in common law or the Consumer Rights Act 2015, Betfred could not rely on their terms and conditions to exclude their liability to pay Mr Green his prize money.
What we can learn
Even though the Betfred case is fact-specific, businesses contracting with consumers in all sectors can take several useful points from this judgement:
- Carefully consider the Consumer Rights Act 2015 and supporting guidance around unfair terms and the drafting of fair consumer contracts.
- Use plain English when drafting terms and conditions, offering clear explanations of terms and avoiding overly legalistic or technical language, where possible.
- Ensure consistency of formatting and capitalisation throughout the terms to ensure that the meaning of the clauses can be clearly understood.
- Any terms seeking to exclude or reduce trader liability, or increase a consumer's financial risk, must be clearly brought to the attention to the consumer and their consequences explicitly set out.
- Ensure that all drafting is unambiguous. Any ambiguity will be construed in the consumer's favour.
- Terms that could be seen to be unfair may not bind the consumer.