Clickwrap vs. Browsewrap Agreements: What You Need to Know About Online Terms of Service

When purchasing goods and services online, you often see links or pop-up boxes referring to a “terms of service” agreement. Sometimes the website requires you to click a box stating that you have read and accepted these terms. In other cases, there may just be a link to a terms of service page that you can choose to read or ignore before proceeding with your transaction.

Unfortunately, even when a person is required to check the box, they often do so without taking the time to actually read the fine print. This can prove costly if a dispute arises with the online merchant or service provider. Terms of service agreements often contain binding arbitration clauses that waive your right to file a lawsuit in the event of a dispute. Instead, you must submit to arbitration, where your rights and remedies are often far more limited than in traditional civil litigation.

Florida Judge Denies Crypto Market Operator’s Demand for Arbitration

While federal and state law strongly favors the enforcement of arbitration agreements, there are limits to how far Florida courts will go in allowing so-called “browsewrap agreements.” That is, online terms of service that do not require the user to affirmatively indicate their understanding and acceptance.

A recent decision from a federal judge in Miami, Lopez v. Herro, provides an apt illustration. The plaintiff in this case invested $1 million worth of cryptocurrency in an online cryptocurrency platform operated by the defendant. About a month later, however, the plaintiff’s investment was lost in what is known as a “flash loan” attack, a type of exploit common in cryptocurrency markets. According to the plaintiff, the defendant promised to repay him for the lost money but failed to do so.

This prompted the plaintiff to file a civil lawsuit in federal court. The defendant then moved to compel arbitration based on the “terms of use” on his service’s website. The judge denied this motion.

As the judge explained, there is a critical legal difference between what are called “clickwrap” and “browsewrap” agreements. A clickwrap agreement is one where a website “directs a purchaser to the terms and conditions of the sale and requires the purchaser to click a box to acknowledge that they have read those terms and conditions.” A browsewrap agreement, in contrast, is where the website “merely provides a link to the terms and conditions and does not require the purchaser to click an acknowledgment during the checkout process.”

The judge noted that courts will generally enforce clickwrap agreements with arbitration clauses, as there is evidence that the user was “put on notice” that they were waiving certain legal rights. With respect to browsewrap agreements, however, an arbitration clause is only enforceable if the link to the terms of use was “conspicuous” to a “reasonably prudent user.”

Here, the judge said the link to the defendant’s terms of use was not conspicuous. Thus, the plaintiff never had “constructive notice” he was agreeing to binding arbitration. The plaintiff was thus not required to arbitrate his dispute moving forward.

Contact a Sarasota Consumer Fraud Lawyer

If an online seller or service provider violates your rights under federal or state law, it is important to speak with a Sarasota consumer fraud lawyer as soon as possible. Contact Suncoast Civil Law today at 941-366-1800 to schedule a free consultation.

Source:

scholar.google.com/scholar_case?case=7026544083220527563