Browsewrap

The Stickiness of Browsewrap

A recent client alert from Arent Fox discusses a potential problem for every bank that has a website, which, I assume, means almost every bank. A decision of the US Ninth Circuit Court of Appeals held against Barnes & Noble, which attempted to force a customer to abide by the alternative dispute resolution terms that were contained in B&N’s “terms of use” (TOU) that governed the use of its website. Visitors to the website are notified of the existence of the TOU through a highlighted “hyperlink” at the bottom of the website’s homepage (you can view B&N’s homepage here and scroll to the very bottom of the page, left-hand corner, to see the link). The TOU also appeared, underlined and in different colored font, at the bottom of each web page that the customer used during the check-out process. According to the court, that wasn’t sufficient notice of the TOU, at least not sufficient to bind a consumer to the binding arbitration provisions.

It then went on to explain that, in situations where a website owner wishes to bind a user to the terms in a browsewrap agreement, “the validity of the browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry notice of the terms of the contract” and that, in turn, “depends on the design and content of the website and the agreement’s webpage.”

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In fact, the Ninth Circuit explicitly held that making the Terms of Use available for review via a conspicuous hyperlink is insufficient to create constructive notice:

[W]e therefore hold 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. While failure to read a contract before agreeing to its terms does not relieve a party of its obligations under the contract … the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers. 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.

The author of the client alert, Dana Finberg, thinks that the implicit lesson of the decision may be that “browsewrap” TOU agreements may have to adopt many of the features of “clickwrap” TOU agreements (where the customer actually has to give affirmative consent to having read and agreed to the terms by “clicking” a “I Agree” button or via a similar process), “at least as to individual consumers using commercial websites.”

Obviously, using a “clickwrap” process, whereby all visitors to a bank’s website, before they can use it, must affirmatively consent that they agree to the website’s TOU, is the legally safest method of ensuring enforceability. It’s also a process designed to discourage customers and potential customers from using the website, which is why most banks and other businesses don’t use it (see, as only one example, Chase Bank’s website’s homepage, where the TOU is buried at the bottom of the page and not even highlighted).

A middle ground might be to draw the reader’s attention to the TOU by other means, such as content that explicitly states that the use of the website is subject to the TOU and that draws the reader’s attention through size, color, and/or other variations from the other content. At the very least, the business must consider the risks of using browsewrap rather than clickwrap agreements for its TOU, and consider the impact of those risks on the content of the TOU. For example, should binding arbitration provisions ever be contained solely in a TOU that is presented to a consumer solely as a “browsewrap” agreement? What other processes might make sense to ensure the enforceability of such critical terms? Should separate processes be used with respect to agreements with web site users who are not customers and web site users who are customers?

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