The questionable use of Terms of Use

Are your terms of use enforceable?

In the olden days, customers signed agreements using quill and ink; for many, a handshake sufficed.

These days, customers purchase many services and goods online. How do customers give their consent to the terms of their purchases in cyberspace [cue eerie music]? Most of our startup clients require their customers to agree to online terms of use (TOU), whether for a website or mobile app. The TOU set out “rules of the road” for customers, such as usage rights and prohibitions, which our clients need the ability to legally enforce. This ability rests on legal acceptance of the TOU by customers – without this, there is no binding contract.

What constitutes a user’s acceptance?

Courts have enunciated a variety of factors to be considered in answering one overarching question: what is the likelihood that a customer saw, read, understood, and agreed to the terms?

Perhaps the most interesting factor – also the one that causes businesses the most headache – is how customers indicate their consent to TOU.

The method of acceptance most likely to be enforced is accomplished by “click-to-accept” using single purpose buttons. This method requires a user to click a button that says “I agree” (or words to that effect). There is some variation in how companies present their TOU under this method. Courts favor layouts that require users to scroll through to the end of TOU before being able to click the button over those that simply include a hyperlink to TOU next to the button, on the perhaps optimistic premise that such layouts encourage customers to actually read TOU.

In contrast, dual purpose buttons receive more scrutiny from courts. A dual-purpose button allows a user to click only once to both accept the TOU (presented in hyperlink) and perform a specific task (e.g., log-in to an account, or sign-up or register for a service or product). In a rush to complete the task, how likely is it that a user will click on the TOU hyperlink?

Even worse, from a legal perspective, are browse-to-accept TOU – these do not require users to take any concrete action to indicate their consent, and therefore leave no “audit trail” of consent. Most often, browse-to-accept TOU are simply posted on a company’s website, waiting to be discovered by the conscientious (and litigious?) reader. Along the continuum of potential methods of acceptance, browse-to-accept remain prevalent, and as you now understand, the most questionable. We get it: no business wants to bog down potential customers with legalese or create time/effort-related hurdles to customer acquisition. However, failing to account for how your customers accept your TOU may render your TOU unenforceable.

In Conclusion

At goodcounsel, we spend our time learning about, and staying abreast of, exciting topics such as what constitutes user acceptance of online terms – so you don’t have to.

Categorised as: Legal Issues