THIS MAY CHANGE EVERYTHING: The Ninth Circuit Just Refused to Enforce an Online Disclosure Form–and Its a HUGE Deal

Editor’s note: An earlier version of this article addressed the need for standards on lead generators. Definitely need those. But wanted to note that the good folks–and my good friends–at PACE and Consumer Consent are working on specific standards and an SRO for lead generators (and already have some very helpful standards for call centers). Hopefully the SRO will happen quickly and standards arrived at will be granular and specific and helpful enough to make cases like Berman a thing of the past. I remain 100% committed to seeing standards obtained for this industry and you can expect that I will push hard for adoption of any suitable standards arrived at by PACE, Consumer Consent, or any other organization looking to help provide clear standards for companies in this important industry.

All right, so its that moment where everyone has to say–again–“I hate to admit it but the Czar was right.”

I know,  I know. Its tedious. Seeing the future is no fun sometimes for me either.

So for the last few leads related conference–contact.io, lgw, leadscon–I’ve been giving a presentation featuring this slide:

As I explained in the presentation, a district Court found that this website layout was not sufficient to give the consumer conspicuous notice of the disclosure terms he was accepting. This is critical–as I have been saying–for lead sellers and buyers to understand because if they buy leads with similar presentations they may not be legally protected.

Well just a day after dealing the lead gen industry another shocking blow, the Ninth Circuit Court of Appeals affirmed yesterday finding that the district court got it right. And EVERYONE buying or selling website leads or obtaining arbitration via online disclosures needs to pay attention right now.

The Court found that the disclosure did not give reasonably conspicuous notice of an arbitration agreement to the consumer. Notably THIS IS A LOWER STANDARD than applicable to express written consent. Meaning that if your disclosure doesn’t meet THIS test it likely will NOT suffice under the FCC’s PEWC rules:

[The disclosure] is printed in a tiny gray font considerably smaller than the font used in the surrounding website elements, and indeed in a font so small that it is barely legible to the naked eye. The comparatively larger font used in all of the surrounding text naturally directs the user’s attention everywhere else. And the textual notice is further deemphasized by the overall design of the webpage, in which other visual elements draw the user’s attention away from the barely readable critical text. Far from meeting the requirement that a webpage must take steps “to capture the user’s attention and secure her assent,” the design and content of these webpages draw the user’s attention away from the most important part of the page.

Indeed the court established a rule that consumers are entitled–shocking–to more notice:

Website users are entitled to assume that important provisions—such as those that disclose the existence of proposed contractual terms—will be prominently displayed, not buried in fine print.

Eesh.

It gets worse. A user is only bound by terms if the button they click ACTUALLY SAYS SO. Buttons that say “continue” or the like are no good:

In using the websites, Hernandez and Russell did not take any action that unambiguously manifested their assent to be bound by the terms and conditions. Defendants rely on plaintiffs’ act of clicking on the large green “continue” buttons as manifestation of their assent, but merely clicking on a button on a webpage, viewed in the abstract, does not signify a user’s agreement to anything. A user’s click of a button can be construed as an unambiguous manifestation of assent only if the user is explicitly advised that the act of clicking will constitute assent to the terms and conditions of an agreement.

Those of you sitting in on the 2.5 hour compliance panel at LeadsCon heard the panel emphasize this point over and over again. The button MUST draw the consumer’s attention to the fact that terms are being accepted or that clicking the button is a final binding act of legal significance. (An asterisk is fine too.)

Now there is good news here too. As I have also been telling folks over and over again, the ultimate sellers/providers of goods or services need to be disclosed in a disclosure. But that disclosure can be a hyperlink. The Ninth Circuit agrees with me, but only if it is apparent a hyperlink is present:

Second, while it is permissible to disclose terms and conditions through a hyperlink, the fact that a hyperlink is present must be readily apparent. Simply underscoring words or phrases, as in the webpages at issue here, will often be insufficient to alert a reasonably prudent user that a clickable link exists

This is the first appellate court decision to directly weigh in on issues of format respecting online leads to this degree. So it is a very helpful–and incredibly important–case to keep in mind. But it is critical to ANY company that uses online disclosure forms to capture consent to arbitration–and critical class action waivers.

Berman gives us a few very clear rules to take away for anyone trying to capture consumer consent or arbitration agreements online:

1. Font cannot be too small (whatever that means) or too light (whatever that means).
2. The button must clearly advise the consumer in some form or fashion that terms are bein accepted.
3. Hyperlinks are ok as long as they are clear.

Contact me to discuss other standards that your business MUST keep in mind when buying and selling leads OR when trying to secure arbitration via an online form. You don’t want to learn about these standards for the first time from one of my blogs…