You probably agree to arbitration, among dozens of other terms and conditions, multiple times a day without really realizing it. Who reads all that legalese, anyway? Despite the common practice of clicking without thinking, the law requires companies to take some steps to make users aware of what exactly they’re agreeing to when they buy products or sign up for services online.
Companies prefer arbitration because it is cheaper and more private than traditional litigation. There’s also a common conception that arbitration favors companies over individuals, and potential claimants are so put off by the process that they never bother to go forward with their complaints. Because of this imbalance, the law requires companies to be clear when they include an arbitration clause; recently, e-cigarette giant Juul had its arbitration requirement tossed because the company wasn’t clear enough.
Juul had its terms and conditions on the company website, but users did not have to click anything to show they consented to the terms. These types of agreements are called “browsewrap” because the company tries to bind the user to terms and conditions simply because the user browsed the website. Courts are skeptical of these agreements because it’s hard to prove that a user of the site actually knowingly agreed to the terms. This is Juul’s current homepage (as of Aug. 30, 2019). See the Terms & Conditions down in the right-hand corner?
Once a user clicks on that link, they’re redirected to Juul’s full terms and conditions page:
In contrast, courts regularly uphold “clickwrap” agreements, where a user has to click a box stating that they agree to terms before proceeding, like when you buy something from Amazon:
In general, browsewrap needs to be clear – both in visibility and that further use of the website constitutes an agreement to be bound. The burden is on the company to show that the information is enough to put a reasonable user on notice of the terms. So, how do you make browsewrap enforceable?
Not only do you need to hyperlink the terms and conditions, the link needs to stand out so users can distinguish it from other parts of the website. The Juul court found that a reminder to users that by registering they had agreed to the site’s terms was not enough when the hyperlink was indistinguishable from the rest of the site. Seemingly simply steps like changing the color, italicizing, underlining or CAPITALIZING the text (or a combination of these) can be enough to make those terms enforceable. The court’s decision in Juul came down on August 23, 2019, so it’s unclear if Juul has already changed its website. But if you notice above, the Terms and Conditions link is bold and underlined, along with its other legal policies, as compared to its non-legal links, like FAQ.
It only takes a small amount of effort for companies to ensure their terms and conditions – including arbitration – are enforceable, and it’s much more cost-effective to implement these simple changes than to fight a lengthy battle in court over whether notice was conspicuous enough. If you have questions about your terms and conditions, contact a member of KJK’s Litigation Group, or reach out to Alexis Preskar (avp@kjk.com or 614.427.5748) to discuss more.
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