This case arises from an appeal from an Illinois federal district court, which ruled that TransUnion, a credit reporting agency, did not give a putative class of its website users proper notice of an arbitration agreement, and thus no contract was formed.

By way of background, lead plaintiff Sgouros filed suit in Illinois federal court, alleging that he had paid nearly $40 for a credit report, including a numbered score, through TransUnion’s website, which was “materially misleading” and “essentially worthless” because TransUnion did not base the score on the same information on which lenders rely. TransUnion’s terms of use on its website were provided for in a Service Agreement, which contained an arbitration clause and class action waiver. Thus, TransUnion moved to compel arbitration, arguing that Sgouros’ claim is subject to arbitration and that he can only bring his claim as an individual, not as part of a class. The Illinois district court ruled that the parties did not form a binding contract, including the agreement to arbitrate.

In its decision, the Seventh Circuit analyzed TransUnion’s website and the user experience. It noted that the user was required to take steps through a scroll-through menu, with a button to click through to authorize TransUnion to request the user’s financial information. However, the court noted that the website did not call the user’s attention to the Service Agreement, which contained the arbitration clause “buried at page 8”, nor did the scroll-through buttons advise the user of the agreement or that he or she was agreeing to its terms. Thus, the court noted that there was no notice to the TransUnion customers that they were agreeing to the terms of the Service Agreement, and that it was not enough that the website provided a scroll-through menu and a hyperlinked copy of the agreement. Rather, according to the court, TransUnion was required to notify its customers that the purchase was subject to the terms of the agreement.

Thus, the Seventh Circuit agreed with the district court order, holding that no agreement that contained an arbitration clause was formed, and it thus affirmed the denial of TransUnion’s motion to compel arbitration. Sgouros v. TransUnion Corp., No. 15-1371 (7th Cir. Mar. 25, 2016).