Platform providers, marketers, and other calling parties have important legal tools at their disposal to help them avoid or limit their exposure to TCPA class actions.  These tools include properly drafted mandatory arbitration provisions, class-action waivers, and choice-of-law provisions.

But including these provisions in your terms of use is only part of the equation.  An arbitration provision in the terms of use is only valuable if those terms are legally binding on the end user who consents to receive automated calls or text messages.  The question is how do we ensure that consumers agree to these provisions in a manner that makes them enforceable?  The answer does not lie in the TCPA or even in FCC rules and orders, but rather in state contract law.  During the early years of the digital age, this would have been a difficult question to answer.  But given the amount of online commerce, courts have sought to provide greater clarity and guidance on this issue.

The Evolution of Online Contracting

With each passing day, consumers purchase and inquire about more and more products and services over the Internet, making online inquiry and purchase forms the primary means by which marketers and businesses obtain consumers’ assent to their Terms of Service or Terms of Use.  And with this rapid move to online engagement, online agreements have become integral to the marketplace and legal battles, including those legal battles relating to the TCPA.  Traditionally, these online agreements have taken one of two forms: the “browsewrap” agreement or the “clickwrap” agreement, the latter being the preferred choice.

Browsewraps: A browsewrap agreement does not require the user to manifest assent to a marketer’s terms and conditions expressly before continuing to use or engage with whatever service or product the browsewrap applies to.  It essentially seeks to create an agreement between the consumer and marketer merely based upon the consumer’s use or engagement, and the agreement can take various forms.  Typically, though, the type of browsewrap you see will have a hyperlinked “Terms of Service” at either the top or bottom of a webpage alongside a notice indicating that, by merely using the website’s services, the user agrees to and is bound by the marketer’s terms.

During the early years of online contracting, browsewraps were extremely popular and today they are still deemed binding and enforceable contracts in certain states.  But in recent years almost every federal court and most states have looked at browsewraps skeptically, and in the TCPA context they have been viewed as an unenforceable means by which to compel arbitration due to the lack of notice they provide to consumers.  Take, for example, Nghiem v. Dick’s Sporting Goods, Inc.  There, the plaintiff brought a TCPA class action claim against the retail giant, and Dick’s moved to compel arbitration based upon its browsewrap Terms of Use, which was hyperlinked in between two other hyperlinks at the website’s footer.  The court denied Dick’s motion, ruling that the browsewrap—and the arbitration clause within—was not enforceable because of its inconspicuous placement, which failed to provide the plaintiff with any knowledge of its existence.

Clickwraps:  A clickwrap agreement also usually appears on a webpage, but is most commonly placed within an online form that the consumer fills out and requires that the consumer assent to any terms or conditions by clicking on a dialog box on the screen to proceed with whatever transaction or engagement is taking place.  To form a clickwrap agreement, consumers typically click an “I agree” button or a checkbox after being presented with the opportunity to view the terms and conditions of use, and the contract is formed the moment the user clicks the button.

Clickwraps are now commonplace and take various forms.  For example, you may have entered into a clickwrap wherein the Terms of Service are only hyperlinked next to the “I agree” button, or you may have been required to scroll through the entire Terms of Service before being presented with the opportunity to continue your transaction.  You may have even seen a clickwrap where the “I agree” checkbox is already clicked for you.  Each of these types of clickwrap, at least in certain circumstances, have been held binding and enforceable in various courts, such that the clickwrap is the obvious choice for online contracting.1

Notice and Acknowledgement are Key

Why do courts deem clickwraps enforceable but not browsewraps?  Well, as one court noted: “[C]ontract law only permits enforcement if there was reasonable notice of terms plus some action capable of being construed as assent.”2  And typically clickwraps, but not browsewraps, are placed in such a manner, and require enough human interaction, that courts find the average consumer to be cognizant of the Terms’ existence and the Terms’ application to the consumer. 

Best Practices for Ensuring Clickwrap Enforceability

Needless to say, the clickwrap will likely not be found enforceable if it does not comply with these qualifications.  Accordingly, there are some best practices any calling party should follow to create and display an enforceable clickwrap:

  • Provide Access to the Terms of Service: Whether it be via a hyperlink, a scroll-through window, or on the webpage itself, the consumer should always be presented with the Terms of Service so that they can be viewed any time during the transaction or engagement process.
  • Display Notice of the Terms in A Clear, Legible Format: Make sure that a notice to the Terms and the Terms themselves are printed in a conspicuous manner, such that they can be easily read by the average consumer.
  • Require Affirmative Action to Express Assent: The consumer should be required to accept the terms by affirmatively clicking a box and should clearly explain the consequences of acceptance.  The words of acceptance should be unambiguous (e.g., “I agree” or “I accept”) and should acknowledge what the consumer is accepting (e.g., the Terms of Service, Terms of Use, and/or Privacy Policy).
  • Maintain Accurate Records of the Acceptance and the Terms: Finally, make sure you have in place an accurate and consistent method of preserving records of consent and the version of Terms the consumer assented to.  Consumers should also be able to store or print the Terms for themselves.  (Friendly reminder: the TCPA’s statute of limitations is 4 years, so you should keep your TCPA consent records for four years plus the life of the campaign.)

With online engagement growing daily, online contracting—especially clickwraps—will only become more popular.  Thus, it is imperative that calling parties implement these agreements in ways that the courts have already approved.  Of course, each state court’s and federal court’s specific views on the form and format a clickwrap should take vary, but the discussion above highlights some key principles.

1See, e.g., Hancock v. AT&T, Inc., 701 F.3d 1248 (10th Cir. 2012) (clickwrap with scroll-through window held enforceable; In re Travel Online Co., 953 F. Supp. 2d 713 (N.D. Tex. 2013) (clickwrap with hyperlinked Terms of Service held enforceable); La Force v. Gosmith, Inc., No. 17-cv-05101-YGR, 2017 U.S. Dist. LEXIS 204500 (N.D. Cal. Dec. 12, 2017) (clickwrap with pre-checked acceptance box held enforceable).

2Sullivan v. All Web Leads, Inc., 2017 WL 2378079, at *7 (N.D. Ill. June 1, 2017).

Legal Disclosure

The material in this blog is for information purposes only; it is not legal advice.  You should contact an attorney to seek advice pertaining to the Telephone Consumer Protection Act and online contracting.  Attorney advertising.  Case results depend on a variety of factors unique to each case and do not guarantee or predict a similar result in any future case.