What Uber's Unenforceable Terms Teaches Us About Sign-in-Wrap

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On Monday of this week, the Supreme Judicial Court of Massachusetts declined to enforce Uber’s terms and conditions.

Christopher Kauders sued Uber after three Uber drivers refused to give Kauders a ride because he was blind and accompanied by a guide dog. Uber filed a motion to compel arbitration, pursuant to an arbitration clause Uber users allegedly agree to when creating an Uber account. 

Related Content: Clickwrap Litigation Trends: 2021 Report

Sign-up Screen Design

Before users can request transportation services on Uber’s mobile application, they must register for an Uber account. When Kauders signed up for an Uber account, Uber used a three-screen process.

On the final screen in the registration process, Uber included the following language at the bottom of the screen: “By creating an Uber account, you agree to the Terms & Conditions and Privacy Policy.” The words, “By creating an Uber account, you agree to the” were less prominently displayed than the words “Terms & Conditions and Privacy Policy,” with the latter words appearing in a separate box. Once the user was done filling out information on the screen, he clicked a button labeled, “Done” to finish the account registration process.

The Court's Assessment of the Agreement

The court found that this agreement presentation failed to put users on reasonable notice of the terms. Users were not required to scroll through the Terms & Conditions, nor were users required to click the hyperlink linking to them. Additionally, the agreement language was “oddly displayed in the two-part format,” with the significant agreement language displayed less prominently than other information.

Furthermore, the title of the screen indicated a purpose other than contract acceptance, and users were not alerted that they were accepting the terms by clicking the button labeled, “Done.” As a result, the court noted that Uber’s screen design “enables, if not encourages, users to ignore the terms and conditions.”

Related Content: How to Design and Present Enforceable Online Terms

The court also called out that Uber’s agreement presentation and acceptance process for users of the app was in stark contrast with that of Uber’s drivers. Uber drivers, according to relevant case law referenced by the court, were required to review and accept Uber’s terms by clicking “YES, I AGREE,” and then were prompted to confirm that they reviewed and accepted the terms for a second time.

Courts Prefer Clickwrap Over Sign-In-Wrap

Notably, the court expressed a preference for clickwrap agreements, noting that requiring users to “expressly and affirmatively assent to the terms, such as by indicating “I Agree” or its equivalent, serves several important purposes.” Clickwrap agreements put users on notice of the terms with the action users are required to take to “sign.”

The court argues that “without an action comparable to the solemnity of physically signing a written contract… we are concerned that such users may not be aware of the implications of their actions where agreement to terms is not expressly required.”

For those who are familiar with case law surrounding the enforceability of online contracts, this decision is not a surprise. The enforceability of sign-in-wraps has definitely been on the decline in recent years, with 2020 seeing around a 64% success rate for sign-in-wrap enforceability. More and more courts are holding that sign-in-wrap agreements fail to put users on reasonable notice of the terms because users are not required to affirmatively assent to the terms by taking a specific action, such as clicking a button or checking a box. 

How Uber's Sign-In-Wrap Previously Fared in Court

In fact, just last year, Uber suffered the same ruling as Monday’s with two other cases against Uber users. In both cases, users were presented with a sign-in-wrap, and the court declined to enforce Uber’s terms due to users having insufficient notice of the terms.

On the other hand, Uber was able to enforce the terms in three cases last year against drivers. The driver sign-up process, as mentioned above, used a clickwrap agreement to secure acceptance of the terms. Like the court in this case, previous courts have also expressed a preference for clickwrap over sign-in-wrap agreements to Uber.

Uber clearly knows that the driver sign-up flow, which contains a clickwrap, is enforceable and preferable. And multiple courts have told Uber that the user sign-up flow, which contains a sign-in-wrap, is not enforceable. So the question is, why doesn’t Uber convert the user sign-up process to include a clickwrap? 

After a high-profile loss like Uber’s on Monday, companies using sign-in-wrap agreements for user acceptance of terms should take notice and take action. 

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!

clickwrap litigation trends 2021 report

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