The continuing story of Honest Joe

In our last article (‘Heads I Win, tails you lose …’) we referred to several of the more controversial clauses appearing in the Terms and Conditions of some online Bookmakers. This article looks at two of those ‘T&Cs’ in more detail with reference to some current examples.

Our last article referred to a double-barrelled business model that appears to have been adopted by some online bookmakers in their increasing determination to eliminate the age-old problem of the winning punter. The first barrel is loaded up with the supposed regulatory duties to carry out a second round of ‘back end’ due diligence when a punter seeks to withdraw his funds in order to get hold of the punter’s bank statements and other personal information. Once that has been obtained the second-barrel comes into play: the Terms & Conditions.

This article looks at two of the central clauses appearing in Honest Joe’s T&Cs that, in our experience, he tends to rely upon in his attempts to avoid paying: (1) the ‘no funny business’ clause and (2) the ‘IBAS’ clause.

The ‘no funny business’ clause

Most bookmakers include in their T&Cs a clause that seeks to protect them against losses incurred as a result of a customer’s improper conduct. In principle that is perfectly fair – no one expects bookmakers to be forced to pay out in circumstances where a punter has been cheating. The problem with some of these clauses is that, boiled down, what they actually say is little more than ‘we’re not paying you a penny if we think you have been up to any funny business’.

For example:

“[Honest Joe] reserves the right to retain any monies in a customer’s account that it considers, at its sole discretion, to have been obtained as a result of any error, any fraudulent activity or any other activity of any nature deemed by [Honest Joe] to be in bad faith.”

That’s a lot of “any“s.

In our view, it is completely unclear what kind of behaviour it is that Honest Joe is trying to contractually outlaw here. In fact it looks rather like Joe himself wasn’t too sure when he sat down to draft this clause so he decided the best thing would be for him to be judge, jury and executioner of whether a punter has in fact acted in breach of it. He isn’t sure what behaviour he’s worried about quite yet but he’s confident he’ll know it when he sees it.

And what on earth does he mean by an “error“? He isn’t talking here about a technical error (for example putting up a wrong price on his website) because he deals with that elsewhere in his T&Cs. Some might argue that accepting a winning bet was an ‘error’ on the part of the bookmaker but plainly no one would seriously suggest that this clause allows a bookmaker to avoid paying out simply because he regrets having taken the bet in the first place (we are yet to see a provision allowing the punter to retrospectively escape a bet because he made an error).


“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

 – Lewis Carroll, Through the Looking Glass, And What Alice Found there


But the most controversial words in this clause are “at its sole discretion“. To most fair-minded people, the idea of a clause allowing one party to a contract to refuse to fulfil his obligations simply because he decides, whether reasonably or otherwise, that the other party has somehow behaved badly, is absurd. However on a strict reading of the clause set out above, Joe could refuse to pay out because he had visited Rosie in her brightly-painted caravan at Cartmel and been informed, via the medium of her Crystal Ball, that the punter in question is ‘bad news’.

Some bookmakers do not agree that such an interpretation is perverse. In fact they take the view that their entitlement to retain the funds in a punter’s account entirely at their own discretion means that they do not even have to tell the punter in question their grounds for doing so. Worryingly we are increasingly seeing cases where a punter is informed by the bookmaker that his funds have been appropriated with no further explanation than a reference to the bookmaker’s own ‘funny business’ clause. However in our view the odds of an English court agreeing with that interpretation do not look good for Honest Joe.

Other bookmakers do, in fairness, make an effort to explain what kind of conduct they say will entitle them to appropriate the funds in a customer’s account. However even these more detailed clauses can contain some fairly odd provisions. For example some seem to suggest that they are entitled to retain any sums in a client’s account in the event that he is declared bankrupt, regardless of whether the punter actually owes the bookmaker anything. It would be interesting to hear the views of the bankrupt’s actual creditors when they learn that available funds are sitting in an account that a third party has, without explanation, decided to treat as his own. Clearly such a clause is unworkable.

Ironically it would seem that Joe’s decision to throw the kitchen sink at this clause will actually work against him, not least as result of the provisions of the Consumer Rights Act 2015 which provide (at section 69(1)) that “If a term in a consumer contract… could have different meanings, the meaning that is most favourable to the consumer is to prevail.” This rather suggests that Joe may find that he has scored something of an own goal when a clause like this is finally put before a Judge.

And the Consumer Rights Act does not by any means stop there. Section 62(1) provides: “An unfair term of a consumer contract is not enforceable on the consumer“. Section 62(4) goes on to provide that “a term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.” It is difficult to imagine a clause that would fall more squarely within that definition of an unfair term than one which appears to be intended to allow the bookmaker to seize the funds in a consumer’s account – deposits and winnings – if the bookmaker decides, at its sole discretion, that the customer has in some way been up to no good.

The ‘IBAS clause’

The Gambling Commission’s position on the use of arbitration services (such as IBAS) seems to be pretty straightforward. Provision 6.1.1 of the Commission’s ‘Social Responsibility Code’ (which bookmakers licensed in the UK are bound by) provides that:

The services of any such ADR [Alternative Dispute Resolution] entity must be free of charge to the customer and must not be subject to terms which restrict, or purport to restrict, the customer’s right to bring proceedings against the licensee in any court of competent jurisdiction. Such terms may, however, provide for an agreed resolution of a dispute (arrived at with the assistance of the ADR entity) to be binding on both parties.”

This is not, with respect to the Commission, the clearest piece of drafting but it seems fair to say that it means ADR entities are to be presented to the punter only as an alternative to court proceedings – not as the only game in town. This is a point that, in our experience, is lost on some bookmakers. Consider for example whether the following clause complies with the spirit of Provision 6.1.1:

If, at the end of the complaint process, you consider [Honest Joe] not to have settled the dispute, you may refer the matter to one of our named ADR entities, alternatively, you can refer the matter via the European Commission’s Online Dispute Resolution (ODR) Platform, who will then forward it on to the relevant ADR entity.”

Or this one:

“Where the customer has raised the dispute with [Honest Joe], and all reasonable avenues to resolve the dispute with [Honest Joe] have been exhausted, and where the customer is not satisfied with the outcome, and wishes to take the matter further, they may: (i) lodge a complaint with the Alternative Dispute Resolution (ADR) provider, IBAS; OR (ii) lodge a complaint via the European Online Dispute Resolution (ODR) website.”

In our view, clauses of this nature do not make it sufficiently clear that arbitration is only one option open to a punter seeking to enter into a formal dispute.

By and large, bookmakers are very keen for disgruntled punters to refer any disputes to the arbitration service in the UK, IBAS. In some respects that is perfectly reasonable, after all the IBAS service is free for the punter and the process significantly cheaper for the bookmaker.

But IBAS does not appear to be an appropriate forum for disputes that go beyond the actual bets placed by a punter on his account. In our last article we described a situation where a minority of bookmakers were potentially misusing their regulatory duties under the Proceeds of Crime Act 2002 and related legislation for commercial gain.  The Commission’s Social Responsibility Code provides that arbitrators are able to deal with ‘disputes’ defined as a ‘complaint relating to the outcome of the complainant’s gambling transaction (Para 6.1.1(5))‘. A complaint regarding a bookmaker’s regulatory conduct or the fairness of its T&Cs does not appear to us to be a complaint about a ‘gambling transaction’.

Indeed IBAS appears to  have made it perfectly clear that its expertise is limited to the validity of wagers. At paragraph 1 of its own Terms and Conditions it explains: “IBAS will only adjudicate when the .. dispute concerns a wager that was placed in England, Wales or Scotland … and where the disputed wager does not involve issues which are properly the concern of the Gambling Commission … or is judged by IBAS to be of a type more appropriately dealt with by another Authority or the courts.”

While it is of course possible that the bookmakers most keen to use IBAS are merely attracted by the relative simplicity and value of the service, it occurs to us that there are other potential reasons. Two immediately spring to mind.

First, IBAS explains that in coming to a decision on disputes referred to it, it takes the position that the The first point of reference in all adjudications will be the gambling operator’s rules. When a customer makes a bet there is an agreement that the bet will be settled in accordance with those rules. Given the controversial nature of some of the T&Cs it might be seen as a significant benefit to the bookmaker that disputes are decided by an organisation that does not analyse whether those rules are fair but instead uses them as a starting point in deciding the dispute.

The second is that IBAS proceedings must be kept confidential by all parties.

The example clauses set out above are based on existing provisions appearing in different sets of T&Cs. They are used as examples only of what we see as problematic wording and their inclusion does not necessarily mean that the bookmaker in question has engaged in any of the activity described in this or our last article.

 

This article does not constitute legal advice – see ‘Legal‘.

 

 

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