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As more companies put their terms and privacy policies online, clickthrough litigation continues to skyrocket. In 2019 alone, litigation increased 15% from the year before. And within the last five years, there has been an increase of over 50%.
As we've covered in previous posts, there are three main types of online agreements that are most often enforced in court: clickwrap, sign-in-wrap, and browsewrap agreements. Each has its pros and cons and has different success rates in court based on the type of evidence used to enforce it.
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A clickwrap agreement is one in which the user affirmatively agrees to an online agreement by checking a box or clicking a button that says, "I agree."
These agreements employ a single-purpose button or checkbox, where the user clicks a button or checkbox to explicitly agree to the terms of the contract. User assent to the contract terms is the only purpose of the button in these situations, which is why we refer to such buttons as single-purpose.
In 2019, clickwrap agreements had a 80% success rate, down from 97% in 2018. One key driver of this decline is that courts are becoming more demanding in the evidence they require behind these agreements. In addition to requesting more robust back-end records of acceptance, the courts require high-quality screenshots of the pages that contain the agreement and affidavits/declarations (sworn testimony from higher-level employees).
For example, in Scotti v. Tough Mudder, the court ruled against enforcing Tough Mudder's terms (and therefore their arbitration clause) because the screenshots provided were barely legible and the employee who provided the affidavit did not sufficiently establish their personal knowledge of the screen.
On the other hand, the court in Tanis v. Southwest Airlines enforced the defendant's online agreement and arbitration clause because their back-end records provided identifying information such as employee ID number, name, date, and time, sufficiently proving that the plaintiff accepted their terms.
As the courts grow more sophisticated in their assessments of online agreements, the distinction between good (successful) agreements and bad (unsuccessful) agreements becomes event sharper.
Sign-in-wrap agreements are a hybrid between clickwrap and browsewrap agreements. Sign-in-wrap agreements do not require the user to affirmatively agree to a contract by clicking a button or checkbox but instead notify the user of the existence of the contract and advise that by clicking the button to proceed to the next screen, the user is agreeing to the contract.
Websites can integrate sign-in-wrap agreements into any action that requires the user to click a button to proceed, such as registering, signing up, signing in, and logging in. Sign-in-wrap agreements employ a dual-purpose button, where the user clicks a button to perform a specified task (such as logging in, signing up, signing in, or registering) and is notified that by clicking the button to perform that task, the user is also agreeing to the terms.
In 2019, sign-in-wrap agreements had an overall success rate of 65%, up from a 60% in 2018. This slight increase indicates that companies are being more meticulous with the presentation of their sign-in-wrap agreements to the users on the screen. Still, the success rates aren't particularly high because of sign-in-wraps' use of dual-purpose buttons (whose primary purpose is completing the sign-up/sign-in task rather than agreement acceptance) rather than single-purpose buttons.
For example, the court in Anand v. Health refused to enforce Fluent, Inc.'s terms because they were wrapped up in a poorly designed sign-in-wrap agreement. The court reasoned that "there was nothing that told the user that she would manifest her assent to those terms and conditions by clicking 'Continue.'"
Still, courts are more likely to enforce these agreements when defendant can explicitly prove that the users were given sufficient notice. In Phillips v. Neutron Holdings, the court enforced Lime's sign-in-wrap agreement since the hyperlink to the online agreements provided conspicuous notice, and because “the hyperlink is ‘in close proximity’ to the two sign-up buttons.”
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Browsewrap agreements do not require the user to expressly signify any sort of assent to the company’s terms; users are not required to click a button or checkbox. Rather, users assent to the company’s terms simply by using the website. Most browsewrap agreements include a notice somewhere on the screen stating that by using the website, the user is agreeing to the company’s terms and conditions. The notice is generally accompanied by a link to the terms, with both the notice and the link usually located at the bottom of the screen.
Because browsewrap agreements do not require the user to take any sort of affirmative action to assent to the contract terms, they are rarely enforced and are not the best practice for online agreements.
Understanding clickwrap, sign-in-wrap, and browsewrap agreements is essential to parsing the world of online agreements and litigation trends. This allows businesses to successfully present their terms and understand the risks and rewards of each type of agreement.
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!