United States: Website Design Implicated In Two Rulings On Enforceability Of Online Terms – Highlights The Importance Of Legal Review Of Design Decisions

This past summer, we wrote about two instances in which courts refused to enforce website terms presented in browsewrap agreements. As we noted, clickthrough agreements are generally more likely to be found to be enforced. However, even the enforceability of clickthrough agreements is going to depend, in part, on how the user experience leading to the "agreement" is designed. Two recent decisions illustrate the importance of web design and the presentation of the "call to action" language in determining the enforceability of a site's clickthrough terms.

In a decision from early November, a D.C. federal court ruled that an Airbnb user who signed up on a mobile device had assented to the service's Terms and was bound to arbitrate his claims. (Selden v. Airbnb, Inc., 2016 WL 6476934 (D.D.C. Nov. 1, 2016)). Conversely, in a notable decision from late August, the Second Circuit refused to rule as a matter of law that the plaintiff was bound by the arbitration clause contained in Amazon's terms and conditions because the plaintiff did not necessarily assent to and was on constructive notice of the terms when he completed the purchase in question. (Nicosia v. Amazon.com, Inc., 2016 WL 4473225 (2d Cir. Aug. 25, 2016)).

In Selden v. Airbnb, the plaintiff brought a putative class action asserting Fair Housing Act and related claims against Airbnb based upon alleged discriminatory rental practices by Airbnb hosts. Airbnb contested liability and also moved to compel arbitration based upon the service's terms of service; the plaintiff Selden countered that the sign-up process did not place him on adequate notice that he was agreeing to Airbnb's terms, including mandatory arbitration.

In granting defendant's motion, the court ruled that Airbnb's sign-up procedures were sufficiently clear to place the plaintiff on notice that he was agreeing to the terms when he created an account on an iPhone. The court held that Airbnb's mobile sign-up screen, with its conspicuous statement about the Terms of Service, adequately placed users on notice of those terms, and that the plaintiff assented to those terms by clicking the sign-up box and using the service.

Airbnb's mobile sign-up screen, as seen by the below screenshot, presented the plaintiff with three options in descending order: "Sign up with Facebook," "Sign up with Google," and "Sign up with Email." Below the "Sign up with Email" button was text that read: "By signing up, I agree to Airbnb's Terms of Service, Privacy Policy, Guest Refund Policy, and Host Guarantee Terms" (with the various agreements hyperlinked).

Examining the sign-in screen, the court found the notice to the terms to be "conspicuous": the language "By signing up, I agree..." was placed in the middle of the page, in close proximity to all three sign-up buttons and the text appeared "in dark font, in sharp contrast to the white background." The court also noted that the statement and accompanying hyperlinks to the terms were "clearly legible, appropriately sized, and unobscured by other visual elements" and "[a]lthough not directly under the first or second alternative sign-up buttons, any reasonably-observant user would notice the text and accompanying hyperlinks."

Interestingly, in other contexts, some argue that the mobile screen acts as a limitation to providing consumers notice about an app's privacy practices or other terms – for example, litigants often argue that important contractual terms are "buried" in a lengthy document displayed on a tiny smartphone screen. Yet in this case, the simplicity of Airbnb's sign-up screen for mobile users helped sway the court to rule that the user was given adequate notice.

In the other case, however, Nicosia v. Amazon, a different conclusion was reached. The plaintiff purchased a weight loss product that allegedly contained a substance removed the market and thereafter brought claims under the Consumer Product Safety Act and state law. The lower court dismissed the complaint on the ground that the plaintiff was bound by the mandatory arbitration provision in Amazon's terms. In reversing, the Second Circuit stated that plaintiff had plausibly stated a claim because, at this stage of the litigation, "reasonable minds could disagree on the reasonableness of notice" given to the plaintiff and as such, Amazon failed to show plaintiff assented to the arbitration clause as a matter of law.

As seen in the image of the checkout page at issue, the plaintiff encountered a "Review Your Order" page that contained the sentence "By placing your order, you agree to Amazon.com's privacy notice and conditions of use" in smaller font, with the "privacy notice" and "conditions of use" displayed as blue hyperlinks and a "Place Your Order" button to the right.

In finding that Amazon failed to carry its burden to show that plaintiff was on notice and agreed to the mandatory arbitration provision as a matter of law, the court stated:

"Nothing about the 'Place your order' button alone suggests that additional terms apply, and the presentation of terms is not directly adjacent to the 'Place your order' button so as to indicate that a user should construe clicking as acceptance."

The court further stated the critical language itself meant to bind the user ("By placing your order, you agree to Amazon.com's...conditions of use") was not bolded, capitalized, or conspicuous in light of the whole webpage, and, unlike the clean presentation in Selden, the call to action language was somewhat lost in the array of text and information on the order page:

"Although it is impossible to say with certainty based on the record, there appear to be between fifteen and twenty-five links on the Order Page, and various text is displayed in at least four font sizes and six colors (blue, yellow, green, red, orange, and black), alongside multiple buttons and promotional advertisements. Further, the presence of customers' personal address, credit card information, shipping options, and purchase summary are sufficiently distracting so as to temper whatever effect the notification has."

Now two decades in, online contracting is commonplace and it is assumed that the reasonable consumer generally appreciates that by signing up for a particular service or completing an online purchase, they will be agreeing to the terms and conditions of the site or provider. With that background, generally speaking, courts will often enforce clickwrap agreements where a user is reasonably presented with notice that completing a transaction will bind the user to terms of service. However, that is not always the case – online merchants and servers providers must take care in structuring their user experience to provide for clear user notice and assent to such terms. As illustrated by recent decisions like Nicosia and Selden, design, presentation and placement is more than just an aesthetic issue – it is also integral to enforceability of user terms and conditions. Lawyers must stay involved in these creative decisions to ensure that design and related issues do not undermine enforceability of such terms.

Website Design Implicated In Two Rulings On Enforceability Of Online Terms – Highlights The Importance Of Legal Review Of Design Decisions

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