Many companies use shipping wrappers or associated connection agreements to present their terms of service for consumer acceptance. On April 5, 2022, the United States Court of Appeals for the Ninth Circuit refined the standard for applying terms of service presented on websites via hyperlinks. The ruling affects how companies must design their web pages and present their terms of service to ensure that those terms, including arbitration agreements, class action waivers, product licenses and warranty disclaimers , are enforceable.
In Berman v Freedom Financial Network, LLC, — F.4th —-, 2022 WL 1010531 (9th Cir. Apr. 5, 2022), the Ninth Circuit considered whether consumers bound the terms of service presented via a hyperlink displayed in the same gray font as the surrounding larger, apparently accepted text by selecting a green “continue” button near a statement that the consumer has understood and agreed to the terms. The court held that these features did not sufficiently inform consumers that they accepted the terms. As a result, there was no agreement between the company and the consumers, including no agreement to arbitrate their disputes.
But berman did more than simply reaffirm these principles. The ruling also identified specific website design features that are lacking and which companies should use to create enforceable agreements.
To properly inform consumers of the Terms of Service, a website “must do more than just underline the hyperlinked text.” The court explained that a hyperlink presented with “a contrasting font color (usually blue) and the use of all capital letters” may sufficiently alert consumers to the terms of service. Businesses should also pay attention to the rest of the web page, as “other visual elements” could “distract the user’s attention” from the notice and render the agreement unenforceable.
For consumers to agree to the terms, the website “must also explicitly notify a user of the legal significance of the action [they] must take to enter into a contractual agreement. The court explained that consumers clicking a button must be “explicitly told that the act of clicking will constitute consent to the terms.” By bermanit is not sufficient to place a statement about the conditions next to a button that the consumer selects to continue, in particular when the text of the button does not indicate that selecting it implies acceptance of the conditions.
Consumer disputes are prevalent in the Ninth Circuit, including for companies headquartered in other jurisdictions. The light at bermanbusinesses are encouraged to engage a lawyer to review their web page design and terms of service layout and implement any necessary updates.
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