Online Retailers’ Power Over Users

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Apr 16, 2016

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woman on laptop accepting conditions for websiteOnline retailers are eager to give their customers the fastest, easiest, shopping experience possible. They certainly don’t want to put any barriers on the path to purchase.

eCommerce companies face a challenge in binding users to their Terms of Service, Licensing Agreements, or other legalities without slowing down (or worse, derailing) the sales process. What’s a company to do?

The Evolution of Browsewrap

Back in the “olden days” — when most software was purchased in a store, and users brought a box with a disc in it home to install the software — software companies relied on “shrinkwrap” agreements.

They would print the terms of the license to use the software on the box itself, with a notice that warned customers that if they don’t agree to the terms, they shouldn’t rip open the plastic. By tearing the shrinkwrap plastic, buyers were agreeing to the terms.

As the digital world moved more and more online, software companies mostly switched to “clickwrap.” At some point in the purchase process, users had to check a box or click a button signifying their agreement to the terms, which were either right there next to the button, or found in a link near the button. This is still very common — before Apple will install an update to the operating system on your Mac, iPad, or iPhone, you have to click a box indicating you’ve read and agree to the terms of the license.

Even though most people presumably don’t actually read all that legal fine print, the fact that you said you did binds you to them.

However, if you tell people that they have to check a box indicating they agree to the terms, some people will actually stop to read them. Some people may get distracted, and the sale might not be finalized. So a little click can result in a loss of some business.

Many companies have tried to get around this problem by going a step further, from clickwrap to browsewrap.

With browsewrap the Terms of Use (or other legal documents) are posted on the site, with a link somewhere. The page includes a statement to the effect of “by using this site you agree to these terms.”

What do the Courts Say?

Unfortunately for companies that like to give their users as smooth a purchase experience as possible, browsewrap agreements cam be difficult to enforce.

A 2012 article in Forbes describes the problems Zappos ran into when trying to enforce a browsewrap agreement compelling arbitration when faced with dozens of lawsuits stemming from a data breach that affected 24 million customers.

In its ruling the court threw out Zappos’ attempt to force arbitration based on the browsewrap agreement:

The Terms of Use is inconspicuous, buried in the middle to bottom of every webpage among many other links, and the website never directs a user to the Terms of Use. No reasonable user would have reason to click on the Terms of Use, even those users who have alleged that they clicked and relied on statements found in adjacent links, such as the site’s “Privacy Policy.”

Despite the fact that this case is four years old, many companies don’t seem to have gotten the word. The same exact thing happened in a more recent case, from March, 2016.

In Long v. Provide Commerce, Provide Commerce, operator of the website, tried to compel arbitration based on a clause in its browsewrap agreement. In that case the court found the link to the Terms of Use was so inconspicuous it was hard to find even if you were actively looking for it.

The court provided some advice: online retailers would be well-advised to include a conspicuous textual notice with their Terms of Use going forward.

Bottom Line

If you want to make sure your Terms of Use are binding, use clickwrap, not browsewrap. If you make the business decision to rely on browsewrap despite the risk, make sure you at least have a conspicuous notice, and make the link easy to find.

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