Any company that collects lead data from their own website should include a mandatory arbitration provision in their online terms of service. If properly drafted and disclosed, an arbitration provision is highly effective at keeping TCPA class actions at bay.
That said, the devil is in the details, and companies with sites that feature a mandatory arbitration provision should take note of a recent Ninth Circuit Court of Appeals opinion in which the Court refused to enforce a mandatory arbitration provision in connection with a TCPA class action.
In Berman v. Freedom Financial Network, LLC, the Ninth Circuit Court of Appeals affirmed the district court’s refusal to compel arbitration of the plaintiff’s TCPA claims because the defendants’ website did not conspicuously notify users of hyperlinked terms and conditions, including the mandatory arbitration provision, nor did it advise website users that act of clicking the form submission button would serve as their agreement to those terms.
The website at issue offered free samples, promotions, and gift cards to consumers who provided their personal information on the site’s registration form. The form submission page used bright and colorful graphic elements and displayed a form submission button that simply said “continue,” rather than using a word that would inform users that clicking the button would complete the registration process.
Between the more conspicuous website elements and “continue” button, the form “sandwiched” two lines of tiny gray text that stated: I understand and agree to the Terms & Conditions which includes mandatory arbitration and Privacy Policy. The underlined phrases contained hyperlinks, but without customary design elements – like a contrasting color or all capital letters – that would conspicuously set the hyperlinks apart from the surrounding text.
In its analysis, the Court determined that the defendants failed to demonstrate that the plaintiff consented to the terms and conditions (including the arbitration provision), because: (1) the assent disclosure was not sufficiently clear and conspicuous; (2) the assent disclosure did not draw users’ attention to the hyperlinked terms; and (3) the form’s design failed to adequately describe the specific act that would constitute assent to site’s terms and conditions. Specifically, the text of the submit button on the web form only prompted users to “continue,” without giving any indication that clicking it would bind users to the site’s terms and conditions.
The Court did provide some guidance on what could have constituted adequate notice: the opinion suggested that it might have enforced the arbitration agreement if the defendants’ website featured the following conspicuous notice on or adjacent to the form submission button: “By clicking the Continue button, you agree to the Terms & Conditions.”
The Court emphasized that the question was not whether the plaintiff was aware of the mandatory arbitration provision in particular, because the website “did not explicitly inform [users] that by clicking on the ‘continue’ button they would be bound by the terms and conditions” in the first instance.