Clickwrap & Browsewrap Agreements Not Enforceable?

Imagine you are on a website to purchase something. You scroll through a veritable novel of legal documents. You then click “I accept.” These agreements are commonly referred to as Clickwrap or Browsewrap agreements. In reality, you have no idea what you accepted.

In the alternative, you are a business owner. You have a website that allows your clients to purchase your goods or services or otherwise interact with the site. Like most websites you have seen, your web developer used a contract in a scroll box with an “I accept” button when they set up accounts. These are common scenarios in today’s world and the Seventh Circuit Court of Appeals has recently chimed in on these practices. Many internet law practicioners have been waiting for this opinion.

In Sgourous v. TransUnion Corp, the plaintiff sued TransUnion. He claimed that TransUnion violated the Illinois Consumer Fraud and Deceptive Practices Act – a statute passed to protect consumers. The plaintiff claimed that Transunion sold him a worthless credit score. He was unable to use the score to successfully negotiate lower auto loan rates. So, he sued TransUnion in the Northern District of Illinois.

TransUnion argued that the Northern District of Illinois should not hear the case. Rather, it argued that its agreement with the plaintiff required arbitration – not a lawsuit. (If you wonder why TransUnion might put so much effort into getting to arbitration instead of a suit, arbitration provisions are commonly used to prevent creation and sustaining of class action suits.) TransUnion explained that the plaintiff ordered his credit on a website containing a  scrollable box with a Service Agreement. The district court determined that this scrollable box agreement did not bind the plaintiff in arbitration.

The Seventh Circuit Court of Appeals agreed. It concluded that the arbitration clause was not part of the agreement between TransUnion and the plaintiff because:

  • TransUnion buried it in the Service Agreement
  • The website did not require users to assent to the Service Agreement when they clicked “I accept”
  • The website lacked any clear statement that there were conditions on the purchase of the credit score.

So what? Why should the reader care? Well, this case puts website owners on notice, especially those with terms “buried” in scrollable boxes on notice. If they intend to bind website users to certain terms, they need to review this case (or have an attorney do so). Upon doing so, the reader may need to adjust how his or her website operates. Here in Illinois, Wisconsin, and Indiana, simply relying on “everyone else does it that way” is no longer a tenable position. You must carefully examine your browsewrap and clickwrap agreements.

Jonathan LA Phillips leads the firms efforts on internet law matters at Shay Phillips, Ltd. As one of the few downstate firms (with a statewide presence) focusing its practice on internet, intellectual property, and startup law (see our Crowdfunding Article), we are uniquely positioned to help any business in Illinois with the sorts of issues this TransUnion case raises. Feel free to call us for a consultation.