Clickwrap, No; Scrollwrap, Yes. Are your app's Terms of Service enforceable?
App publishers intent on enforcing an arbitration provision -- or, really, any portion of their Terms of Service -- can take guidance from this June decision by Judge Koeltl in the Southern District of New York. The decision describes the types of agreement that do -- and do not -- constitute reasonable notice sufficient to create a binding consumer contract.
(Spoiler alert: Lyft's scrollwrap agreement, which required the plaintiff-user to view and accept the Terms, was binding. The clickwrap agreement, which required the plaintiff-user to click through to a linked set of terms, was not.)
Judge Koeltl found that Lyft's "click-wrap" arbitration agreement was unenforceable because while they required the plaintiff-user to click a box indicating that he had "read and agreed" to a hyperlinked-copy of the Terms, the method of obtaining "did not alert reasonable consumers to the gravity of . . . 'clicks.'" Among other things, the Judge observed that the font size and hyperlink color for the links was too small.
But a later scroll-wrap update to Lyft's Terms created a binding agreement. The methods of obtaining user consent involved a legend reading:
“Before you can proceed you must read & accept the latest Terms of Service.” The Terms of Service were set out on the screen to be scrolled through. No subtle hyperlink was needed. The Terms of Service begin with the warning: “These Terms of Service constitute a legally binding agreement . . . between you and Lyft, Inc.” Before proceeding, the user was required to click on a conspicuous bar that said: “I accept.”
Those, the Judge found, were sufficient to bind the user: motion to compel arbitration granted.