On March 17, a California Court of Appeals confirmed a lower court’s refusal to compel arbitration of consumer fraud claims where the agreement to arbitrate was contained in Terms of Use, which was accessible through a hyperlink at the bottom of each webpage. In Long v. Provide Commerce, Inc., B257910, the court, drawing heavily from Ninth Circuit precedent, held that the “Terms of Use” hyperlink alone on the www.proflowers.com website was not enough to put consumers on notice that, by using the site, they had consented to be bound by arbitration.

Contracts formed on the internet fall primarily into two categories: (1) “clickwrap” or “click-through” agreements – in which website users must click on an “I Agree” box after being presented with a list of terms and conditions of use; and (2) “browsewrap” agreements – where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen. Unlike clickwrap agreements, a browsewrap agreement does not require users to expressly agree to the website’s Terms of Use; instead, agreement is manifested by the user’s use of the website.

The Court noted that the Ninth Circuit follows a bright line rule for determining the validity of browsewrap agreements:

[W]here a website makes its terms of use available via a conspicuous hyperlink on each page of the website 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 [of the terms of the contract].

The Long Court concluded that to enforce a browsewrap agreement, sites must give consumers textual notice that continued use of the website will constitute an agreement to be bound by the site’s terms of use.

At issue in Long was whether defendant, Provide Commerce, Inc., which operates www.proflowers.com, could compel a consumer to arbitrate his consumer fraud claims based on a browsewrap agreement located at the bottom of each proflowers web page. The agreement came in the form of a hyperlink to the full text of the site’s Terms of Use, which included an agreement to arbitrate disputes. The court held that the hyperlink alone was not enough to constitute an enforceable agreement:

In our view, the problem with merely displaying a hyperlink in a prominent or conspicuous place is that, without notifying consumers that the linked page contains binding contractual terms, the phrase “terms of use” may have no meaning or a different meaning to a large segment of the Internet-using public. In other words, a conspicuous “terms of use” hyperlink may not be enough to alert a reasonably prudent Internet consumer to click the hyperlink. (emphasis added)

Instead, the court opined, “[o]nline retailers would be well-advised to include a conspicuous textual notice with their terms of use hyperlinks going forward.”

The Long decision puts companies doing business with California consumers on notice that simply including a hyperlink to your site’s Terms of Use is not enough to create a binding agreement with users. If, like www.proflowers.com, your site relies exclusively on hyperlinks to direct consumers to the site’s Terms of Use, you should consider reconfiguring the site to require consumers to expressly agree to be bound by the site’s terms of use