Court Holds That Arbitration Clause In 'Hybridwrap' Terms Is Unenforceable

A federal district court in Illinois recently held in Anand v. Heath that a digital marketing company could not force a user to arbitrate because a "Continue" button on its website did not provide clear notice that clicking the button constituted assent to the hyperlinked terms and conditions that contained the arbitration provision.

As we have noted previously, website operators who wish to enforce their online terms against users will have a higher likelihood of success if they do two things. First, the website should display the terms to users in a conspicuous fashion. Second, and applicable here, the website should affirmatively and unambiguously require users to assent to the terms. Anand demonstrates that online agreements risk unenforceability when the terms are presented in a manner that does not make clear to users that they are agreeing to be bound.

The website www.retailproductzone.com offers users free gift cards in exchange for their responses to surveys and for their consent to be contacted for marketing purposes. Reward Zone USA LLC, a subsidiary of Fluent Inc., maintains the website. In June 2017, plaintiff Narantuya Anand registered on www.retailproductzone.com and completed a survey to receive a free gift card. According to Anand, she then received several unwanted telemarketing voicemails and text messages.

Anand filed a putative class action against Fluent and Reward Zone alleging violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227. The defendants moved to compel Anand to arbitrate her claims based on the terms and conditions present on www.retailproductzone.com, which included a mandatory-arbitration clause. Anand argued that she never agreed to the arbitration clause contained in the website's terms and conditions.

When Anand navigated through the www.retailproductzone.com website in 2017, the words "I understand and agree to the Terms & Conditions which includes mandatory arbitration and Privacy Policy" were displayed above a "Continue" button. The defendants contended that, when Anand registered on the website, submitted her contact information, and advanced through the website after clicking "Continue," she expressly assented to the arbitration clause contained in the terms and conditions. Anand denied that she had agreed to be bound by the arbitration clause.

In determining whether the arbitration provision was enforceable against Anand, the court analyzed the configuration of the terms-of-use...