E-commerce leaders take note: If you want to force your customers to do anything via your terms and conditions, you need to give the T&C its own checkbox. So help me, that is the edict just handed down by the U.S. Court of Appeals for the Seventh Circuit. The specific ruling involved getting customers of TransUnion to waive their right to sue, but attorneys watching the case point out that it could apply to almost anything. Want customers to sign over their salary direct deposits to you? No problem, as long as it’s in your T&C and, critically, it has its very own checkbox.
Before we delve into this legally correct but logically bankrupt ruling, some quick background. The current law of the land involving the broader issue of forcing consumers to accept arbitration instead of allowing them to sue in civil court is a case from five years ago called AT&T Mobility v. Concepcion, referred to by lawyers simply as Concepcion. In that 5-4 decision, the U.S. Supreme Court ruled that companies had the right to mandate arbitration simply by mentioning it somewhere in a T&C document, one as long as they liked.
There are many who argue that arbitration is, generally, a far worse option for consumers than going to civil court. For one thing, the hearings are private and the decisions and transcripts are not publicly available. It’s that risk of public airing of bad practices that is behind so many civil court settlements.
Second, the arbiters are private businesspeople. Whether arbiters, as a group, are more or less qualified to weigh these difficult decisions than appointed or elected judges is certainly debatable. But what is indisputable is that companies hire the arbiters. Although that may not consistently and directly deliver a favorable verdict, the reality is that arbiters who routinely rule against the company are not likely to get hired by companies very often. In short, the process of elimination means that the arbiter likely has a history of business-friendly rulings.
What happened with the Seventh Circuit, in a case called Gary W. Sgouros v. TransUnion, is where this gets interesting and has immediate implications for e-commerce today. In that case, TransUnion did indeed list mandatory arbitration in its T&C. Where it dropped the ball, according to the Seventh Circuit, is in some Web design minutia.
In the court’s summary of the case, it described what Sgouros — a consumer who had sought to obtain a TransUnion credit report — did: “Sgouros proceeded to Step 3 by clicking on the ‘I Accept & Continue to Step 3’ button. Nowhere did this button require him first to click on the scroll box or to scroll down to view its complete contents, nor did it in any other way call his attention to any arbitration agreement.”
The court further explained its thinking, applying various legal precedents to the current case, which truly does revolve around GUI functionality and button placement issues. “What cinches the case for Sgouros is the fact that TransUnion’s site actively misleads the customer. The block of bold text below the scroll box told the user that clicking on the box constituted his authorization for TransUnion to obtain his personal information. It says nothing about contractual terms. No reasonable person would think that hidden within that disclosure was also the message that the same click constituted acceptance of the Service Agreement.”
The court’s remedy: There must be a separate area to click for the T&C itself. “A website might be able to bind users to a service agreement by placing the agreement, or a scroll box containing the agreement, or a clearly labeled hyperlink to the agreement, next to an ‘I Accept’ button that unambiguously pertains to that agreement,” the decision said.
“The bottom line is that TransUnion, either deliberately or without adequate review, took a shortcut that caused it to forfeit rights it easily could have secured,” said David Goodman, an attorney with the law firm Greensfelder, Hemker & Gale. “Instead, they did it in a way that failed to provide adequate disclosure. If you want to bind somebody to a contract, you have to play fair and clearly display the contract terms. The more a company goes out of its way to make sure customers were given full opportunity to read the contact terms, the more likely the contract will pass legal muster.”
From a designer’s perspective, the panel’s ruling says that designs must be more explicit in what the user is agreeing to. That is fine, but the regrettable fact is the very concept of this kind of click signifying a meaningful knowing waiver of being able to sue is ridiculous.
Here’s the problem with the original Concepcion ruling. It said that a company has the right to say that, as a condition of this deal, the customer has to waive arbitration. A small change would have made a huge difference. It allowed consumers to opt out of that waiver, if that’s what they wanted. It would also have to explain in understandable terms the implications for a consumer of having arbitration rather than a civil lawsuit.
What happened after Concepcion was absolutely predictable. A huge number of large companies started adding these clauses into their standard customer agreements. In today’s mobile society, is working with a mobile carrier truly optional? If all of the major carriers insist on arbitration clauses in their purchase paperwork, do U.S.-based consumers truly have a choice? And if all of the competing banks in a community insist on the same provision, is it truly a choice?
If the intent of the court is to allow a consumer who wants to retain his/her right to sue in public courts to do so, requiring that companies add an extra click box isn’t going to do that. Alas, this ruling won’t help consumers who want to avoid arbitration. On the plus side, though, it will generate a ton of work for Web designers.