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Companies in different industries and verticals vary in their clickwrap sophistication levels. For example, a B2C eCommerce technology company might be more used to the need for clickwrap as part of their streamlined, digital processes than say a heavily regulated financial enterprise company. This influences the “common agreements litigated” and “common best practice violations” across industries and generally. The following are clickwrap litigation trends and statistics across industries:
Content Download: Clickwrap Litigation Trends: 2021 Report
Arbitration clauses were the most common clause companies tried to enforce in 2020. Rulings on motions to compel arbitration comprised nearly 89% of clickwrap cases that came out this past year. Forum selection clauses were a distant second most common clause, with rulings on motions to transfer venue pursuant to a forum selection clause comprising only 6% of cases. Other common arguments included consent based on contract terms and enforcement of non-competes and non-disclosure agreements.
In 2020, finance was the top industry trying to enforce their terms in court, accounting for 18% of cases. These cases involved traditional financial institutions like credit unions and banks, as well as some fin-tech companies. Some notable mentions for this industry include Intuit, Wells Fargo, Upstart Network, and Merrill Lynch.
eCommerce came in at a close second, taking up 15% of cases. Some notable mentions for this industry include Amazon.com, Walmart, and Shutterfly. Gig economy companies, such as Uber and DoorDash, came in third with 11%. Other industries hit consistently include online marketplaces, travel, and gambling/online gaming.
The meteoric rise of eCommerce and online transacting is reflected in the data we at PactSafe have about the usage of clickwrap and online agreements within our own platform.
In the PactSafe app, for example, 90% of agreed events (i.e. anytime someone agrees to legal terms by either clickwrap or traditional e-signature, thereby creating binding contracts) were tied to eCommerce companies. Even more, 85% of tracked agreed events in the PactSafe platform were clickwrap, with traditional eSignature and other acceptance types making up the other 15%. This reflects not only the global trends present in the eCommerce market, but also the increased use of clickwrap to collect acceptances to legal agreements during online transactions.
Past clickwrap litigation trend reports have discussed how the best approach to online agreement presentation is to embed the legal terms directly on the screen. However, the more popular trend is by and large to link to the terms with a hyperlink. We see this not only in the common presentation of online agreements overall, but also in our app, which shows that 83.5% of clickwrap agreements are presented to users via hyperlink.
Related Content: How Has the Pandemic Affected the Clickwrap Industry
Finally, our app also shows that there was an increase in clickwrap usage over the course of 2020. Considering February as the pre-pandemic “standard,” we noticed a steady and significant rise in average clickwrap usage by eCommerce and other companies from February and peaking at 4x the average in May. By June it leveled back out to half that peak volume, which was still 2x the pre-pandemic average. By and large, eCommerce and online marketplace companies were responsible for the increase.
Of the three main types of online agreements disputed in 2020, 63% were clickwrap agreements, 30% were sign-in-wrap agreements, and 6% were browsewrap agreements.
Seventy percent of clickwrap agreements were successful. In comparison, only 64% of sign-in-wrap agreements and 14% of browsewrap agreements were successful. Compared to 2019, clickwrap and sign-in-wrap agreements increased in popularity while the use of browsewrap agreements decreased significantly. Additionally, success rates for all three types of agreements decreased.
Evidence relied on by the court in deciding whether to enforce the company’s terms continues to fall into three main categories: sworn testimony (affidavits or declarations) by key employees, screenshots, and back-end records.
Most companies used a combination of the three different types of evidence: 23% of companies relied on screenshots and sworn testimony, 14% of companies relied on a combination of all three types of evidence, and 12% relied on back-end records and sworn testimony.
Additionally, 17% of companies relied solely on sworn testimony, and 9% relied solely on screenshots. Notably, 18% of companies either offered up no evidence or relied solely on what was written in the motions, complaints, answers, replies, etc. to support their stance of enforcing the terms.
Over the past year, we've seen a rise in the use of clickwrap agreements, and a decrease in the enforceability of the agreements. Though the rise in eCommerce and the prevalence of digital transactions have triggered an increase in clickwrap usage, companies are still unaware of best practices for enforceable agreements. Our Clickwrap Litigation Trends: 2021 Report highlights trends and takeaways that every company operating in the current business environment needs to know. Download your copy here!