Technology Law Alerts

September 3rd, 2014

eCommerce Best Practice:  Require Customers to Click “I Agree”

The Ninth Circuit recently affirmed what many industry players already recognized: when conducting eCommerce with consumers, the safest practice for businesses looking to enforce their website's terms is to include obvious indicia of consumer consent, possibly through use of a "clickwrap" agreement (where website users are required to affirmatively click on an "I agree" box).

In Nguyen v. Barnes & Noble Inc., 2014 U.S. App. LEXIS 15868 (9th Cir. August 18, 2014), a customer sued Barnes & Noble in federal court over a cancelled purchase. Barnes & Noble cited the arbitration provision in its website terms of use and asked the court to force the parties to resolve the matter out of court. (Many corporations view arbitration as a less-expensive means of dispute resolution.) However, the terms on the Barnes & Noble website were presented as a "browsewrap" agreement, meaning the terms of use were posted on the website via a hyperlink at the bottom of the screen; the company did not require users to affirmatively click that they agreed to the terms before making a purchase. Nguyen argued that Barnes & Noble had not provided him and similarly situated consumers with sufficient notice of the terms, and that customers had therefore not agreed to arbitrate claims.

The trial court agreed with the customer, and Barnes & Noble appealed. The U.S. Court of Appeals for the Ninth Circuit affirmed, stating:

where a Web site makes its terms of use available via a conspicuous hyperlink on every page of the Web site 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. 

This is a significant legal development for any company conducting eCommerce with consumers.  As a best practice, a business operating a consumer-directed website or application should consider using a clickwrap agreement - not a browsewrap agreement - for any website terms it plans to enforce; the mere posting of terms online is unlikely to suffice.

For more information on the Barnes & Noble decision, or any other eCommerce or technology law issues, please contact Greg Boyd at (212) 826 5581 or gboyd@fkks.com, Hannah Taylor at (212) 705 4849 or htaylor@fkks.com, or any other member of the Frankfurt Kurnit Technology, Digital Media and Privacy Group.