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The Southern District of California recently reminded companies that it has concerns about steps to take to make online terms binding. The case arose from a putative class action over alleged false pricing practices brought against Maggy London International Ltd. an online clothing retailer.
In an attempt to compel individual arbitration, the company pointed to a mandatory arbitration provision in its website terms. In California, to enforce an online agreement, a website operator must show one of two things. First, that a consumer had either actual knowledge of the terms of the agreement. Or second, that the company gave the consumer reasonably conspicuous notice of the terms and the consumer took action to unambiguously agree to the terms. Here, the company argued that the font, color, placement, and underline of the link to the terms under the "Pay Now" button on the checkout page was reasonably conspicuous. Additionally, the complaining customer by clicking "Pay Now" to buy product had agreed to the website terms.
The court agreed that the notice was conspicuous. However, relying on several Ninth Circuit cases, the court held that the conspicuous hyperlink to website terms was not enough to bind the consumer to the terms. The court's rationale was that it was not clear to the consumer that by clicking "Pay Now," they agreed to the website terms. Instead, the court determined the company should have had another step, like having words along the lines of "by clicking pay now, you confirm you have read, understood, and agree to the Terms," to make it clear to the website user that they were agreeing to legal terms by clicking "Pay Now."
Putting it into Practice: This case underscores court concerns over on-screen consent flows. The company here had taken steps to make their terms prominent, but nevertheless, having a conspicuous link alone was insufficient. In designing platforms where you are linking to terms, think beyond having prominent links. To address court concerns, look at how you might tie a user's affirmative action to term acceptance.
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