Consumers can hardly shop on the internet these days without mindlessly clicking “agree” to a website’s terms of service or obliviously scrolling past a “terms of service” hyperlink.  These practices – skimming, clicking, or not reading the terms and conditions at all – are surely common and often they make no difference.  But can we as consumers be held to a website’s terms of service when we fail to take the time to read those terms?  Or even notice them?  The courts have been debating some of the answers to these questions for the past few years, and last month, the California Court of Appeals weighed in.

Terms of service agreements typically fall under two categories of internet contracts – “clickwrap” and “browsewrap” agreements.  “Clickwrap” agreements are those which require a user to affirmatively click a button to agree to be bound by a website’s terms; “browsewrap” agreements, on the other hand, are those which infer a user’s assent simply by his or her use of the website.  Litigation surrounding the enforceability of browsewrap agreements tends to arise with regard to arbitration clauses in the following way: a consumer, dissatisfied with a product or service, sues an online retailer.  In response, the retailer attempts to enforce the arbitration clause supplied in its own terms of service. The consumer argues that he or she should not be bound by the terms of service, of course, because the consumer never read them.

This was the scenario at issue in a 2013 class action suit in the Superior Court of California, Los Angeles County.  Plaintiff Brett Long sued ProFlowers.com, an online flower delivery service, on behalf of a class of unsatisfied buyers who each intended to order professionally-made floral arrangements, but instead received do-it-yourself kits which required assembly by the purchaser. Danny Sozzi et al v. Provide Commerce, Inc., d/b/a ProFlowers, 2013 WL 3545880 (Cal.Super.).  When the delivered products looked nothing like the representations made on ProFlowers’ website, Long sued for false and misleading advertising under the California Business and Professions Code.  And ProFlowers, believing itself to be protected by its Terms of Service – to which it provided a hyperlink at the bottom of each page of its website, – demanded that the issue be resolved through arbitration. Long v. Provide Commerce, Inc., 245 Cal. App. 4th 855, 862-63 (2016).           

The Court of Appeals emphasized the consensual nature of arbitration, noting that it may be invoked “solely by reason of an exercise of choice by all parties.”  Id. at 861 (quoting Wheeler v. St. Joseph Hospital, 63 Cal. App. 3d 345, 355 (1976)).  While clickwrap agreements demand a user’s affirmative signal of consent, most commonly by clicking the “I agree to the terms and conditions” button, browsewrap agreements require no such affirmative action, so a user must have had actual or constructive knowledge of the website’s terms and conditions in order to be bound by them.  Here, ProFlowers did not dispute that Long had no actual knowledge since he had not read the website’s terms of service; thus, the determinative issue was whether Long had constructive knowledge of the arbitration clause.  In other words, without actual notice on the part of the consumer, “the validity of [a] browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry notice of the terms of the contract” given the design and content of the website and the conspicuousness of the hyperlink.  Long, 245 Cal. App. 4th at 863 (quoting Nguyen v. Barnes and Noble Inc., 763 F.3d 1171, 1177 (9th Cir. 2014)).

With no California appellate court precedent, the court instead relied on two federal cases from the Second and Ninth Circuit Courts of Appeals, each of which dealt with the enforceability of arbitration clauses in browsewrap agreements based on conspicuousness of the terms of service hyperlink.  In Specht v. Netscape Commc’ns Corp., 306 F.3d 17 (2d Cir. 2002), users were directed to “Please review and agree to the terms of the . . . software license agreement before downloading and using the software.” Id. at 23.  This statement, however, was only visible upon scrolling down from the window containing the download link.  The court found that even though users may have noticed from the position of the scroll bar that an unexplored portion of the webpage remained out of sight, “a reference to the existence of license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.” Id. at 32.  There, the website failed to make it clear that downloading the software was an express acceptance of the terms of service. Ultimately, the arbitration clause was unenforceable. Id.

In Nguyen, a hyperlink to the website’s terms of service was visible in the bottom left-hand corner of every page of its website, its text displayed in a color that contrasted that of the background.  Unlike the website at issue in Specht, on some pages the hyperlink was visible without any need for the user to scroll down.  Indeed on other pages, the hyperlink was close enough to the “Checkout” button to be within a user’s “field of vision.” Nguyen, 763 F.3d at 1178.  Still, the court was unmoved, adopting the rule that “where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice.” Id. at 1178-79.

Informed by these holdings, the California Court of Appeals held in favor of the plaintiffs in Long, finding that the hyperlinks on ProFlowers’ website lacked the obviousness necessary to put a reasonably prudent consumer on notice that he or she would be contractually bound by its terms of service. Long v. Provide Commerce, Inc., 245 Cal. App. 4th 855, 867 (2016).  As the court put it, “given the breadth of the range of technological savvy of online purchasers, consumers cannot be expected to ferret out hyperlinks to terms and conditions to which they have no reason to suspect they will be bound.” Nguyen, 763 F.3d at 1179. Instead, it advised that consumers should be met with conspicuous textual notices to indicate that their continued use of a website will constitute assent to that site’s terms of service. Long, 245 Cal. App. 4th at 867. Thus, the court suggested that the onus be placed on the websites to provide notice, rather than on the consumers to attempt to discern whether the terms are binding.  What determines the requisite “conspicuousness” has not been spelled out precisely, but rather depends on the summation of certain factors such as size, font, and color of the hyperlink as well as its proximity to visible windows and “Checkout” buttons. So if a colorful and conspicuous “terms of service” hyperlink starts jumping off the webpage at us, such that it is impossible to proceed to checkout without noticing it, we may want to give that hyperlink a second thought. Those terms may just turn out to be binding after all.