A recent California case reminds businesses and website owners that browsewrap and clickwrap agreements must be conspicuous for courts to enforce them. See Long v. Provide Commerce, Inc., 245 Cal.App.4th 855 (2nd Dist. 2016). It may be time to review your agreements to ensure they still comply with existing law.
What are Clickwrap and Browsewrap Agreements?
“Clickwrap” agreements require a website user to click on an “I agree” button/box after being presented with a list of terms and conditions of use. By clicking, the user is deemed to have assented to the agreement’s terms.
By contrast, “browsewrap” agreements do not require the affirmative click of the mouse; the user’s agreement is implied or inferred from the user’s continued use of the website. The browsewrap agreement is viewable from a hyperlink placed on one or more of the pages of the website. Browsewrap agreements, in particular, present tricky legal questions of contract formation and true consent.
On many websites, one or more notices are provided telling the website user that, by merely using the services of, obtaining information from, or initiating applications within the website, the user is agreeing to and is being bound by the browsewrap agreement. Often these notices use the phrasing “by visiting this website …” However, the user has already done that (that is, already visited the site). So, essentially, in advance, the user is deemed to have agreed to whatever is in the browsewrap agreement.
Studies have shown that very few internet users actually click on the hyperlinks to read the agreements. Thus, legally, the enforceability of the browsewrap agreement turns on constructive notice — that is, does the website put a “reasonably prudent user” on inquiry notice of the terms of the contract. That, in turn, depends on the conspicuousness of the hyperlinks and associated text (if any).
Likely, “constructive notice” is also somewhat flexible and might be on a sliding scale. The requirement of conspicuousness might be less stringent when a web company is attempting to enforce a provision that most internet users expect. But, likely, more onerous terms will have to be much more conspicuous.
Browsewrap Agreement Enforceability: Long v. Provide Commerce, Inc.
An arbitration provision was on center stage in the case of Long v. Provide Commerce, Inc. In general, courts consider arbitration provisions to be towards to more onerous end of the spectrum.
Long was a class action by purchasers of floral arrangements from Proflowers.com. The plaintiffs alleged that they bought a completely assembled floral arrangement (based on the photos and depictions on the website), but what was arrived in the shipping box was a “make-your-own-floral-arrangement” kit. The plaintiff alleged this violated various California statutes. The defendant sought to compel arbitration of the lawsuit since arbitration was required by the browsewrap agreement.
The plaintiff claimed that he did not read the browsewrap agreement. Thus, he did not have actual notice of the arbitration provision.
In resolving the question of whether the plaintiff had constructive notice — he should have known — the court looked at the overall website design, the placement of the hyperlinks to the agreement, is scrolling necessary to find the hyperlinks, the font size of the hyperlinks, proximity to other hyperlinks, font colors vis a vis background colors and the text (if any) associated with the hyperlinks. From this, the court asked whether a “reasonably prudent internet consumer” would be have enough notice — or warning — that they should go and look at the terms of the Terms of Service Agreement. To be able to enforce an arbitration clause, the court essentially held that such needed to be “conspicuously” placed on the website.
The court resolved these issues against the defendants even though the hyperlinks appeared several times in the “checkout flow” process for completing a purchase. The court focused on the “checkout flow” pages because the retailer admitted that the hyperlinks were even less conspicuous on the product pages. The court noted these deficiencies on the checkout flow pages:
- The hyperlinks were not located next to the fields and buttons a consumer must interact with to complete the purchase order
- The purchase buttons and fields were bright white boxes contrasting sharply with the lime green background
- The “TERMS OF USE” hyperlink was in light green typeface (and using a small font) that did not contrast well with the lime green background
- Scrolling was required on many pages where the hyperlinks were located — sometimes quite a bit of scrolling
The court concluded that the checkout flow was laid out in such a manner that it concealed the fact that placing an order was an express acceptance of browsewrap agreement. As such, the court concluded that the arbitration provision would not be enforced.
The court went even further and said that even if the hyperlinks themselves are conspicuous, that might still be insufficient. The court concluded by stating that “[o]nline retailers would be well-advised to include a conspicuous textual notice with their terms of use hyperlinks going forward.”
Unfair and Deceptive Browsewrap and Clickwrap Agreements
Aside from whether a browsewrap — or clickwrap — agreement is enforceable, an online business must be careful not to violate the section 5(a) of the Federal Trade Commission Act which prohibits unfair and deceptive business practice act.
In a famous case from a decade ago, Sears & Roebuck, Co., was sued by the Federal Trade Commission (“FTC”) for unfair and deceptive practices related to certain tracking software they offered their customers. For extensive discussion of the case, see here.
In that case, the FTC accused Sears of deception in the use of its Terms Of Service (“TOS”) agreement which, according to the FTC, essentially buried in the TOS the full capabilities of a tracking software promoted as part of Sears’ “My SHC Community Program.” The Sears TOS was clickwrap.
The FTC took note of several facts:
- The tracking application, when installed, ran in the background on consumers’ computers and transmitted information to Sears including all of the users’ web browsing (not just on Sears’ sites), online purchases, business transacted during secure sessions, completion of online application forms, online checking accounts, and some of the consumers’ emails and instant messages
- Consumers received extensive advertising with slogans like “Join the Community. It’s Free!” and “Talk to Us! We’re Ready to Make Things Happen” that did not come close to disclosing the amount of information to be collected
- Sears paid the consumer $10 if they kept the software on their computers for at least 30 days
- The TOS Agreement was not available separately
- The TOS Agreement was only linked at a very late stage in the registration process after the consumer had already expended considerable effort
- The TOS Agreement was a scroll box and the provision related to the tracking software did not begin until the 75th line
Taken as a whole, the FTC said that, by burying the details of the software in the TOS which was difficult to locate and came late in the registration process, Sears had been deceptive in disclosing the nature of the tracking software. Sears eventually settled the FTC action and agreed to various changes in how the tracking software was advertised and disclosed.
Time To Review Your Browsewrap or Clickwrap Agreement
If your business has a website with a browsewrap or clickwrap agreement, it might be time for a review based on current and trending law. If your TOS requires arbitration, we recommend conspicuous textual disclosure.
Contact Revision Legal
For more information, contact the professionals at Revision Legal. Revision Legal offers a wide array of legal services related to the internet and business law. We can be reached by using the form on this page or by calling us at 855-473-8474.
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