GoDaddy just implemented changes to its Universal Terms of Service Agreement (UTOS) that significantly altered the legal dynamics for its 21 million customers. The updated agreement, effective immediately and without prior notification, reclassified all users as “business customers.”

The operative section reads:

Our Services are not intended for private, personal or household use.

That’s quite a shock.

Now at first glance you might think, “OK, then my anime fan site is a business now.”  But there’s a crucial change happening here.

Impacts on Consumer Protections

The transformation from consumer to business customer status has substantial implications for consumer rights. Typically, consumer protection laws provide certain rights that do not extend to business transactions.

For example:

1. Withdrawal Rights: Customers in the EU typically have a 14-day cancellation period.  This may no longer apply if customers are categorized as businesses.
2. Unfair Contract Terms: Legal protections against unfair contract terms are more robust for consumers than for businesses, making it harder for customers to contest unfavorable clauses.
3. Regulatory Complaints: Complaints by individuals are often processed differently from those made by businesses, likely hindering customers’ ability to escalate disputes with consumer protection agencies.
4. Class Actions: The reclassification complicates the process for class action lawsuits, which can burden customers with higher legal costs if individual claims fall under more expensive commercial rules.

Dispute Resolution Overhaul

The updated UTOS also introduces a comprehensive rewrite of how disputes will be resolved:

• Disputes will now follow commercial arbitration rules, which generally require higher filing fees compared to consumer arbitration.
• Key changes to the dispute process include a waiver of jury trial rights, mandatory arbitration in specific locations, a pre-arbitration notification process, and the potential need for customers to bear GoDaddy’s legal costs in certain cases.
• New evidence rules severely restrict documentation and testimony options, effectively limiting customers’ ability to present their case.

So Why?

First, who reads terms of service?  Well, apparently John Berryhill does.

Second, I suspect this the classic “lawyers thinking like lawyers without management oversight”.  If you let lawyers have full reign, they’ll write contract language which puts customers in an iron box.  They’re only concerned about protecting the company and not what the commercial ramifications are.  So what they want to do and the language they write needs to be checked by someone who says “that won’t work for our business”.

So I suspect this language was added by an attorney who wasn’t properly overseen.  Someone in the legal department was looking at the legal landscape and said “if we make these changes, we reduce our legal attack surface”.

Now the question is…will GoDaddy keep these terms?  My guess is that now that it’s in place, GoDaddy will see what happens.  If they start dropping customers, they can always walk this back.  If not, why not keep it in place?

What are your predictions?

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