Watch The Fine Print: Ninth Circuit Majority Opinion Requires Heightened Standards for Reasonably Conspicuous Notice of Browsewrap Terms to Compel Arbitration

A recent decision from the Ninth Circuit illustrates that to be enforceable, website agreement terms must be “reasonably conspicuous” and users must “manifest unambiguous assent” to those terms. In Berman v. Freedom Financial Network, LLC, No. 20-16900, 2022 U.S. App. LEXIS 9083 (9th Cir. Apr. 5, 2022), plaintiffs filed a putative class action on behalf of consumers who allegedly received unwanted calls or text messages from defendants in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227 et seq. Defendants moved to compel arbitration, arguing that by using their websites the named plaintiffs agreed to hyperlinked terms and conditions, including a mandatory arbitration provision. The district court denied defendants’ motion, concluding that the webpages’ content and design did not conspicuously indicate the arbitration terms to users.

A panel for the Ninth Circuit affirmed, holding there was no reasonably conspicuous notice of the arbitration terms and users did not manifest unambiguous assent to the websites’ browsewrap agreement.

In assessing whether there was reasonably conspicuous notice, the majority opinion focused on the websites’ particulars and noted the “text disclosing the existence of the terms and conditions on these websites [was] the antithesis of conspicuous.” Because the terms were in “a tiny gray font considerably smaller than the font used in the surrounding website elements, and indeed in a font so small that it [was] barely legible to the naked eye,” the chosen design actually drew “the user’s attention away from the barely readable critical text.” The court also took issue with the websites’ display of hyperlinked terms in the same size and color as the remaining terms and conditions. The court reasoned, “Consumers cannot be required to hover their mouse over otherwise plain-looking text or aimlessly click on words on a page in an effort to ‘ferret out hyperlinks.’”

The court also found that the lack of reasonably conspicuous notice was fatal to the manifestation of unambiguous assent to the terms. To be binding, a website’s notice of applicable terms must be so conspicuous as to enable users to unambiguously consent to the terms, particularly where users may not otherwise take express affirmative action to accept the terms. While the websites stated, “I understand and agree to the Terms & Conditions,” the court noted that this language was in “fine print,” and the provision “did not indicate to the user what action would constitute assent to those terms and conditions.” These deficiencies prevented formation of what may have otherwise been an enforceable agreement, perhaps even rising to the level of a preferable click-wrap agreement, because “the textual notice was not conspicuous and did not explicitly inform [plaintiffs] that by clicking on the ‘continue’ button they would be bound by the terms and conditions.”

This decision may caution businesses with online sales to review their website and undertake additional precautions, as necessary, to ensure enforceability of their terms and conditions, including arbitration provisions. To have a binding agreement based on website use, a user must unequivocally agree to terms and conditions. Enforceability will turn on notice to the user, as notice is the linchpin for creating consumer assent. Reasonably conspicuous notice must be so obvious that there can be no doubt of the user’s knowledge of the terms, such that it acts as a surrogate for assent.

The Berman opinion is instructive and clarifies the standard for enforceability of browsewrap agreements. While browsewrap agreements remain enforceable, businesses with online sales can strengthen their position by prominently displaying terms and soliciting user’s consent. If you have questions about the enforceability of your website’s agreements, you should consult with your legal counsel. Our attorneys regularly counsel and advise clients on these issues.