E-commerce leaders take note: If you want to force your customers to do anything via your terms and conditions, you need to give the T&C its own checkbox. So help me, that is the edict just handed down by the U.S. Court of Appeals for the Seventh Circuit. The specific ruling involved getting customers of TransUnion to waive their right to sue, but attorneys watching the case point out that it could apply to almost anything. Want customers to sign over their salary direct deposits to you? No problem, as long as it’s in your T&C and, critically, it has its very own checkbox.
Before we delve into this legally correct but logically bankrupt ruling, some quick background. The current law of the land involving the broader issue of forcing consumers to accept arbitration instead of allowing them to sue in civil court is a case from five years ago called AT&T Mobility v. Concepcion, referred to by lawyers simply as Concepcion. In that 5-4 decision, the U.S. Supreme Court ruled that companies had the right to mandate arbitration simply by mentioning it somewhere in a T&C document, one as long as they liked.
There are many who argue that arbitration is, generally, a far worse option for consumers than going to civil court. For one thing, the hearings are private and the decisions and transcripts are not publicly available. It’s that risk of public airing of bad practices that is behind so many civil court settlements.
Second, the arbiters are private businesspeople. Whether arbiters, as a group, are more or less qualified to weigh these difficult decisions than appointed or elected judges is certainly debatable. But what is indisputable is that companies hire the arbiters. Although that may not consistently and directly deliver a favorable verdict, the reality is that arbiters who routinely rule against the company are not likely to get hired by companies very often. In short, the process of elimination means that the arbiter likely has a history of business-friendly rulings.
What happened with the Seventh Circuit, in a case called Gary W. Sgouros v. TransUnion, is where this gets interesting and has immediate implications for e-commerce today. In that case, TransUnion did indeed list mandatory arbitration in its T&C. Where it dropped the ball, according to the Seventh Circuit, is in some Web design minutia.
In the court’s summary of the case, it described what Sgouros — a consumer who had sought to obtain a TransUnion credit report — did: “Sgouros proceeded to Step 3 by clicking on the ‘I Accept & Continue to Step 3’ button. Nowhere did this button require him first to click on the scroll box or to scroll down to view its complete contents, nor did it in any other way call his attention to any arbitration agreement.”
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