Are Your Online Terms of Service Enforceable?

By August 6, 2016Contracts
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You may have included terms of service on your website or app, but that does not automatically mean that the terms of service will be enforceable against your customers. To be enforceable, online terms of service must be reasonably conspicuous, and your customer’s agreement to the terms of service must be unambiguous. To satisfy these elements, your preparation and placement of the terms of service should be the result of a thoughtful process.

A recent federal court decision described a situation in which online terms of service are not enforceable. In the case of Meyer v. Kalanick, a federal judge held that the arbitration provision contained in Uber’s (the ride-sharing company) terms of service was not enforceable. In particular, the judge found that customers were not required to click an “I agree” box and that the terms of service were not prominently displayed on the registration screen and were not easily accessible. Based on these findings, the court concluded that a reasonably prudent consumer would not have been aware of the relevant provisions of the terms of service and did not sufficiently intend to be bound by the terms of service. Therefore, the arbitration provision contained in Uber’s terms of service was not enforceable.

As companies try to streamline the registration process, they should be aware of the legal implications of their actions. To have online terms of service that are likely to be enforceable, companies should consider (a) having customers check a box that affirms their agreement to the terms of service or (b) forcing customers to scroll through the terms of service before a purchase or registration, like Apple does with iTunes. Other methods of presentation and agreement also may be acceptable. The key factors to consider are whether the terms of service are prominent and whether the customer’s agreement to the terms of service is unmistakable. Terms of service also should be written in plain language that ordinary consumers understand.

Terms of service are an important risk management tool and can be vital to the success of any company that sells goods or services online or through apps. To adequately protect your business, you carefully should consider not only the content of your terms of service but also how the terms of service are presented and agreed to by your customers. By failing to provide consumers with reasonable notice of understandable terms of service, you may be exposing your business to substantial risk.

Bob Muraski is a business attorney based in Bellingham, Washington.

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