More on the Sufficiency of Website Disclosures

The Internet has been a regular part of our lives for 20 years, and yet courts continue to grapple with the question of what constitutes an adequate disclosure sufficient to bind website visitors to the terms and conditions of a service agreement.

This screenshot of an online browse wrap disclosure process was the subject of a lawsuit titled Sgouros v. Transunion Corp.:

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In that case, the Plaintiff purchased a credit score from the Defendant’s website, and later filed a class action complaint against TransUnion based on the fact that the credit score he purchased was 100 points higher than one he later received.  In the lawsuit, the plaintiff alleged violations of the Fair Credit Reporting Act and state deceptive business practice laws.  TransUnion sought to compel arbitration based on its website terms.

The Plaintiff argued that the terms (and thus the arbitration clause), were unenforceable because they were not adequately disclosed.  According to the plaintiff, he was not subject to the agreement because in order to view it, he was required to scroll through eight printed pages worth of text in the narrow scroll box.

In determining whether the agreement was enforceable, the court applied two-part “reasonable communicativeness” test:  (1), whether the web pages presented to the consumer adequately communicated all the terms and conditions of the agreement, and (2) whether the circumstances supported the assumption that the purchaser had reasonable notice of the terms.  It  found the disclosure insufficient for the following reasons:

  • Nothing on the web page at issue clearly stated that the purchase was subject to any terms and conditions;
  • The only visible language in the scroll box did not clearly indicate that the contents constituted a binding agreement; and
  • The language above the “I accept” button said nothing about accepting contractual terms buried deep in a scroll box.

 

The court’s decision serves as a valuable playbook for website operators: Internet arbitration agreements are generally held to be enforceable, as long as your terms and notices are clear, conspicuous, and easy to read.

Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.