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Unfortunately, many designs go into production without a formal review by an attorney familiar with digital legal enforceability — and as companies like Gogo, Zappos, TransUnion, and many others have found out, this is a costly mistake.
But what mistakes do designers & developers typically make that could cause problems down the road? This blog post outlines what you or your company can do to ensure your terms of service is actually protecting your company or your clients (and what might turn out to be your job!) from expensive lawsuits, legal fees, and costly updates.
In the court's ruling in Berkson v. Gogo, Gogo (the in-flight wifi provider) has started a precedent that will require significant design changes to almost every website where a user can sign up, make a purchase, or log in.
Common to many clickthrough agreements (also called clickwraps and sign-in-wraps) is text under the "submit" (or "sign In," "continue," and "register") button that provides a link to the terms of service that says: "By clicking 'Continue', you agree to our Terms of Service."
Sound familiar? Of course — a lot of websites do it this way. For example, Zappos:
Image of Zappos.com registration screen
When going through the registration flow at Zappos.com, it is not abundantly clear that you are agreeing to a contract.
Likewise, AirBnB doesn't include any mention of their terms when signing up for their service.
Image of AirBnB's sign up page
It is incredibly important that your users know that an agreement exists and that they are agreeing to it. A lack of notice often means your agreements cannot be upheld in court.
Unfortunately, many online stores, apps, or websites hesitate to add a checkbox or scrollbox that details their online contracts because they do not want to affect conversion rates.
But in Berkson v. Gogo, this flow decreased the enforceability of Gogo's terms agreement. The class action suit brought against them is going to go forward, mainly due to the fact that the way in which they displayed the agreements on their website (and the tricky/confusing way they implemented it in their purchase flow).
Because the agreement was ruled unenforceable, the class action suit is going to go forward, costing Gogo hundreds of thousands more dollars in legal fees and potentially even costing them a whole lot more money in damages to their customers. Don't be next on the list!
As you design and or implement how your agreements are embedded into the sign in, checkout, or registration flows, remember your duty to both your company and customers. Part of your responsibility is to ensure they understand that they're entering into a contract to be your customer or to be your user.
This typically means including a scroll box with the details of the agreement, and a checkbox enabling them to clearly accept your terms. Here's a great example from Lyft of how that can be successfully implemented:
Image of Lyft's sign-in-wrap
Don't wait until it's too late (and you get your pants sued off). Review the implementation of your website terms of service with your in-house counsel or law firm today.
Next up in this series, we covered Lack of Record Keeping as the #2 No-No developers usually face.
Update: We have released the 2021 report of clickwrap litigation trends with more up to date best practices and case rulings from the last year. Our Clickwrap Litigation Trends: 2021 Report also analyzes the impact of the pandemic and the boon of eCommerce on the trends we see. Download your copy!