You’ve taken time to craft a strong set of online Terms to protect your online service, but is it enforceable? This question has been at the core of a number of recent cases where plaintiffs have challenged the arbitration clause in online contracts. In Cullinane, et al v. Uber Technologies, Inc., No. 16-2023, 2018 WL 3099388 (1st Cir. June 25, 2018), the First Circuit held that Uber could not enforce its arbitration clause against consumers bringing suit against the company for violations of a Massachusetts consumer-protection statute. The court held that the hyperlink to Uber’s Terms and Conditions (“Terms”)—which was presented to users when they registered for an account—was not sufficiently conspicuous. In doing so, the First Circuit reached the opposite conclusion of the Second Circuit, which upheld the enforceability of a nearly identical Uber consent flow in August 2017. The court in Cullinane closely scrutinized Uber’s mobile registration and consent flow, concluding that the assent to the Terms was not binding, and thus reversing the district court’s grant of Uber’s motion to compel arbitration.
The First Circuit considered whether the contract terms were: (1) reasonably communicated to consumers; and (2) accepted by consumers. Honing in on the first inquiry, the court concentrated on the design and content of the interface, determining that the reference to the Terms was not displayed or presented in such a way that a reasonable person ought to have noticed it. While the opinion represents a fact-specific inquiry, it offers valuable and practical takeaways:
- Affirmative click wraps are not essential. The First Circuit observed that Uber chose not to utilize an affirmative click wrap—that is, Uber did not require users to click a box affirming that they agree to Uber’s Terms before continuing to the next screen. Although the court referred to affirmative click wraps as a “common method” of providing conspicuous notice, it did not rule that they are required by law. Instead, the court indicated that a business could forego requiring such an affirmative action and could rely instead on the display of a notice as long as both the link to the Terms and the language notifying users that the creation of an account would bind them to the linked Terms are sufficiently conspicuous. But, a click wrap still seems like the safest option.
- Consider the context of the language binding the user vis a vis other visible language. While the court recognized that the literal language and number of words on the screens could be seen to favor Uber’s position, it held that the key language “may not be read in a vacuum.” For example, the court emphasized that in addition to the link to the Terms, Uber simultaneously presented the user with words in bold, similarly sized font, and buttons in dark colored, all caps font. This other “attention grabbing” language diminished the conspicuousness of the Terms. In other words, “[i]f everything on the screen is written with conspicuous features, then nothing is conspicuous.”
- Hyperlinks should look like hyperlinks. Despite being placed within its own gray, rectangular box, in larger, bold, and contrasting font, the link to the Terms was not sufficiently conspicuous. The court noted that the “hyperlink did not have the common appearance of a hyperlink,” i.e., it was not blue and underlined. According to the court, this appearance raised concerns regarding whether a reasonable user would understand the gray box was indeed a hyperlink.
- Carefully design the language indicating acceptance. When assessing the enforceability of the assent, the court focused not only on the hyperlink to the Terms, but also the language notifying users that creating an account would bind them to the Terms, i.e., “by creating an Uber account, you agree to the…” Here, the court disapproved of the fact that this language was in a dark gray small-sized, non-bolded font on a black background. The court found that this notice “simply did not have any distinguishable feature that would set it apart from all the other terms surrounding it.”
The First Circuit’s opinion should be viewed in context. It represents the judgment of three federal appellate judges, and other courts applying other state precedent are likely to undertake different inquiries and apply different factors. For example, in last year’s Second Circuit review of a substantially similar Uber registration and consent flow in Meyer v. Uber Techs., Inc., 868 F.3d 66 (2d Cir. 2017), the court held that users unambiguously manifested assent to Uber’s Terms because the design of the screen and language provided reasonable notice to users. That said, at least some courts want companies to make it abundantly clear in the user interface that a consumer is agreeing to a contract, so companies should review their user flow to assess whether changes are warranted to mitigate risk.