A website’s efforts to create a binding contract based on terms buried in the fine print recently hit a snag in the U.S. Court of Appeals for the Ninth Circuit. This court ruled that a website user could not be bound by terms hidden in the fine print of the site.
Two people who visited websites operated by a company called Fluent, Inc. ultimately sought to be lead plaintiffs in a class action claiming that Fluent engaged in an illegal telemarketing campaign where they made phone calls and unsolicited text messages to hundreds of thousands of consumers. The defendants in the lawsuit — the companies on whose behalf Fluent performed the telemarketing campaign — filed a motion to dismiss, saying federal arbitration law requires the claims to be arbitrated.
The Federal Arbitration Act requires that any contract containing a valid arbitration clause be arbitrated. And the courts must compel arbitration of any claim covered by a binding arbitration agreement. The issue here was therefore whether the consumers had entered into a binding arbitration agreement.
A brief description of the location of the arbitration clause on the website gives an idea of where the court was likely to go on it.
As the court noted, Hernandez visited the Fluent website www.getsamplesonlinenow.com from a desktop computer.
Because Hernandez had visited a Fluent website before and previously entered some of her contact information, the webpage she saw said, in big orange letters at the top of the page, “Welcome, stephanie!” . . . In the middle of the screen, the webpage proclaimed, “Getting free stuff has never been easier!” and included brightly colored graphics.
If Hernandez had seen the “Terms and Conditions” hyperlink and clicked on it, she would have been taken to a separate webpage displaying a lengthy set of legal provisions, one of which stated that any disputes related to telemarketing calls or text messages received from Fluent or its marketing partners should be resolved by arbitration.
The formation of a valid contract requires two things – reasonably conspicuous notice of the terms of the contract and action by the consumer unambiguously expressing consent to the terms. Here, the Fluent website failed on both counts.
First, as the court noted, the terms of the contract were barely legible, let alone visible. The notice was printed in lower case gray type and the hyperlink was not highlighted in a different color. It was just underlined. This was paired with brightly colored graphics that distracted the user from the terms. In the court’s view, web designers should inform users of the terms to which they seek to bind consumers. But here, according to the court, the designers “did not take this obligation to heart”.
The court also noted that there was no unambiguous act on the part of the consumer agreeing to the terms. The defendants argued that the consumers expressed their consent by continuing to use the website and pressing the green “Correct” button. The court disagreed. In his opinion, pressing a button only manifests his consent if the user is explicitly informed that this manifests his consent to the conditions. Here, consumers did not receive such a notification. The best practice is to ask the consumer to press a button that says “by pressing this button, I agree to the terms and conditions”. But Fluent did not offer this option to consumers, at its peril.
This case shows that the best way to enter into a contract is to let the other party know that you are entering into one. Ignorance can be bliss, but it’s not a solid business model.
Jack Greiner is a partner at the law firm Graydon in Cincinnati. He represents Enquirer Media on First Amendment and media issues.