Are Online Reader/User Agreements Enforceable?

Have you ever wondered whether the user agreements you see online are enforceable in court? Have you ever read Apple’s or Amazon’s user agreements? Lately, agreement notices are being displayed on CNN indicating if you use the site, you are agreeing to its terms. Have you read the agreement? These agreements consent to cookies, which track your searches and collect all sorts of data about you- so they are important. And as we have seen with Facebook, the information is sold to third parties and there is no assurance as to how they will be used. So the agreements are not innocuous. But, even though you are more or less forced to consent, because you can’t use the site unless you do, you may be bound by its terms.

That is the ruling of the 1st Circuit Federal Court of Appeals announced last week in a case involving Uber (Cullinane v. Uber Technologies, Inc.) That Court, whose precedents control the federal courts of New England and the Caribbean territories, held that those kinds of user agreements will bind the user as long as the notice is conspicuous enough to imply contractual assent/agreement. In Uber’s case, the notice of the user agreement was ruled insufficiently conspicuous to imply assent. The notice was among several other notices on the page, all of the same size and type, rendering none conspicuous, the Court said. The Court indicated a clear preference for links to a user agreement that require the user to scroll through it and fill in a box saying the user read it and agrees to the terms. This was particularly important because imbedded in the user agreement was a mandatory arbitration clause which prohibited class actions and using courts.

The case illustrates the importance of the issue and why mandatory arbitration clauses are a problem. The practices which the action suit challenged were an allegedly fraudulent charge by Uber of $8.75 as a “Massport Surcharge” for travel to and from Logan Airport and an allegedly fraudulent charge of $5.75 for an East Boston toll. The plaintiffs claimed they did not go to the airport or through East Boston. But the agreement contained a clause that said the customers could not participate in a class action or use the courts and it mandated arbitration. Who is going to spend money on a lawyer to recover $15? No one, of course. So effectively, these clauses are very anti-consumer. They permit abuse and prevent a cure or a remedy.

Moreover, the apparent abandonment of the legal principle that contracts of adhesion are not enforceable is troubling. Generally, if a person has no choice but to sign a form, the courts have been reluctant to enforce them. This is particularly true in commercial contexts where the objectionable terms have been printed in small type on the back of invoices and receipts etc. To my way of thinking the typical form online is even more abusive because there is really no choice. It is not just a question of whether you saw the notice or read the proposed agreement. If you want to use the site like CNN or an Apple product, you either agree or don’t use the site. Not a real choice in this digital world.

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