Most people have never read the entirety of the terms and conditions of the iTunes end-user license agreement, or any other similar online agreement. Yet almost all of us have clicked on “I agree” and moved on, despite never having read what we are agreeing to. This risky move just became a little less risky.
In Sgouros v. TransUnion Corp., Case No. 15-1371 (7th Cir. March 25, 2016) The Seventh Circuit recently decided to decline to enforce an arbitration provision because that term was buried at the bottom of a scrollable window (and not immediately visible on the page), with no prompt directing the user to scroll to the bottom.
The plaintiff purchased his credit score from TransUnion and later brought suit alleging that TransUnion had provided him with an erroneously high number and that that number was thus useless to him in his negotiations with a car dealer. TransUnion filed a motion to compel arbitration, arguing that plaintiff agreed to the entire “Service Agreement,” an argument which the district court rejected.
When the plaintiff purchased his credit score, he had to complete three steps to do so. Step 2 was the critical step because it required the plaintiff to pay via credit card and he clicked a button that said “I Agree & Continue to Step 3.” TransUnion used a “clickwrap” service agreement – an agreement with the terms listed in a box and an “I agree” or “I accept” button near the bottom – that required arbitration of disputes and precluded the right to sue as a class action. The window showing the service agreement looked like this:
If the plaintiff had opened the “Printable Version” he would have seen on page 1 a notice that it contained an arbitration clause and would have found that clause in full on page 8.
Unlike previous cases on this issue, in which courts have upheld clickwrap agreements (for example, see Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248 (10th Cir. 2012)), this case is different for a few reasons. The Seventh Circuit held that the “layout and the language of the site” did not provide the user with “reasonable notice that a click” would manifest assent to arbitrate. The court found the following issues with the website’s agreement: (1) the arbitration clause was not visible in the window; (2) the site did not call the user’s attention to the arbitration provision in any other way; (3) the site did not require the user to scroll to the bottom of the window or to first click on the scroll box; (4) it was not clear that the purchase “was subject to any terms and conditions of sale”; (5) the term “Service Agreement” said nothing “about what the agreement regulated”; (6) the hyperlinked version of the agreement was labeled only “printable version” –not “Terms of Use” or “Purchase” or even “Service Agreement”; (7) the bold-faced paragraph was merely an authorization, and the button labeled “I Accept” actually misled the consumer to thinking that this was an acceptance of only the authorization terms.
To conclude, the Seventh Circuit held that, in itself, a scrollable window is not “sufficient for the creation of a binding contract.” Companies with online agreements or internet contracts, those involving arbitration agreements especially, should take this ruling as a warning to carefully scrutinize those agreements.
The attorneys are Rock Fusco and Connelly can help you protect yourself by ensuring that your online agreements are more likely to be found binding and enforceable.