by Kristina Cunningham | Senior Associate, Banking Litigation

Many businesses now offer services online, whether through a website or app.  In doing so, businesses often have users agree to the terms and conditions, which may include an arbitration agreement.  To ensure that arbitration agreements are enforceable, businesses should be mindful in how their web or app developers design and display the terms and conditions to the user and what actions the user must take to agree to said terms and conditions.  When examining the enforceability of online arbitration agreements, court haves broken these online consumer contracts down into four types of agreements:

• Scrollwrap Agreements: Theses agreement require the user to physically scroll through the terms and conditions containing the arbitration agreement before clicking on a separate “I agree” button acknowledging the user’s assent to the agreement.  Court have found scrollwap agreements to be enforceable.
• Clickwrap Agreements: These agreements require the user to click an “I agree” button but does not necessarily require the user to view the terms and conditions.  Court have also found these agreements to be enforceable.
• Browsewrap Agreements: These agreements state that the user agrees to the terms and conditions, including the arbitration agreement, simply by using the website or app.  The website or app may contain a hyperlink to the terms and conditions somewhere on the screen.  These agreements are often unenforceable.
• Sign-In Wrap Agreements: These agreements are a hybrid of clickwrap agreements and browse agreements because sign-in wrap agreements require the user to agree to the website or apps terms and conditions when the user signs-in or logs-in.  Whether a sign-in wrap agreement is enforceable turns on whether the use had reasonable notice of the online terms and conditions and whether the user clearly indicated the user’s assent to those terms and conditions.   This is a fact intensive inquiry where the courts look at three factors relating to the website’s or app’s presentation of the terms and conditions:
• Conspicuous terms or access to terms: The more likely that the user can view the terms, if not read them, as a condition of using the website or app, the more likely the agreement will be enforceable. If the user accesses the website or app without viewing the terms and conditions, then there must be a prominent hyperlink labeled “Terms and Conditions” which is easily recognizable by appearing in brightly-colored and underlined text on the sign-in or login page.
• Uncluttered Screen: The notice or hyperlink to the terms and conditions must appear on a page of the website or app that is not cluttered with other features and therefore not easily spotted by the user.
• Explicit manner of expressing assent: The more apparent the user’s assent to the terms and conditions, the more likely they will be binding on the user.  The website or app should clearly describe that by clicking on a particular button or link, the user is agreeing to the terms and conditions.  A button that reads “I agree” or “I consent” are more likely to be enforceable than a button that reads “continue,” “register,” or “done.”

Thus, businesses should utilize scrollwrap and clickwrap in order to ensure enforceability of an arbitration agreement.  While courts have found sign-in wrap agreements to be enforceable, businesses must be sure to meet all of the guidelines outlines above or risk finding out in litigation that their sign-in wrap agreement is not enforceable.