Do you have a website ? You may need to reconsider how users are notified of changes to the Terms of Service

Following a recent decision, Int’l Markets Live, Inc. vs. Thayer2022 WL 4290310 (D. Nev. Sept. 16, 2022), web hosts should reconsider how they notify users of changes to their web site terms of service.

Courts have long held that a website’s terms of use are a contract between the website host and the website’s users. Like any other contract, to be enforceable, there must be evidence of mutual consent between the parties. Historically, websites have used a variety of strategies to show mutual consent to ensure their terms of service are enforceable. Many sites require users to affirmatively tick a box to verify that they have read and understood the terms of service (known as “clickwrap” agreements). Other sites require users to review the terms of service when registering an account on the website (known as “sign-in-wrap” agreements). Still other sites simply display their terms of use at the bottom of their web pages, and users implicitly accept those terms by their use of the website (known as “in-browser” agreements).

A website’s terms of use, regardless of type, have many provisions designed to protect the website host, including a provision that allows the host to make unilateral changes to the terms. Unilateral changes to online contracts are generally permitted. However, the courts considered whether a user had been given “reasonable notice” of these changes and given the opportunity to review them. See § 304 of the Uniform Computer Transactions Act (good faith contract modifications are valid if the changing party “reasonably notifies the other party of the modification”). To provide reasonable notice of changes to the terms of service to their users, the websites used many of the same techniques used to show mutual assent – clickwrap, browser-wrap, sign-in-wrap, or variations of these, together with email notifications, pop-ups or a statement in the Terms of Service that continued use of the Website after any changes to the Terms of Service constitutes User consent, that the user examines them or actually consents to them.

However, following the court’s decision in Live International Markets, web hosts should reconsider their strategy on how they will provide reasonable notice to their users. In Live International Markets, a website host provided information on cryptocurrency markets through a subscription service to its users. The website used clickwrap and browser-wrap agreements to inform its subscribers of the website’s terms of service. Later, the website host made several unilateral changes to its terms of service, as permitted by the original agreement. However, the website did not require its users to check a box confirming that they had reviewed and understood the new changes, nor did the website email its users at subject of the change. Instead, the website only posted the changes on its website’s terms of service page, accessible from the user’s dashboard home page. The court held that this was insufficient to provide reasonable notice to users of the website and therefore the change to the terms of service was unenforceable. The court explained:[p]parties to a contract have no obligation to periodically check the terms to see if they have been modified by the other party,” and dismissed the lawsuit in favor of website users.

The holding in Live International Markets reflects a recent trend requiring more evidence to show that a user has in fact consented to a modified terms of service for the agreement to be enforceable. See, for example, Sifuentes v. Dropbox, Inc.2022 WL 2673080 (ND Cal. Jun 29, 2022) (holding email notification was insufficient to bind a user to the updated terms when there was no evidence that the user had actually received and read the email); Alkutkar v. Bumble, Inc.2022 WL 4112360 (ND Cal. September 8, 2022) (requiring binding ratchet agreement to apply changes); Optimum Constr., Inc. c. Harbor Bus. Corporate Compliance2022 WL 4608170 (D. Md. September 30, 2022) (explaining that it would be unreasonable to expect a user to scroll through the terms of service on a website and compare the terms with a previous version in order to determine if changes had been made); Berman versus Freedom Fin. Network, LLC30 F.4th 849, 857 (9th Cir. 2022) (“merely clicking a button on a web page” may be insufficient to show assent).

In light of this trend, web hosts should reconsider how they inform their users about new provisions in their terms of service and implement them.

In general, it is clear that browser wrapper provisions do little to ensure that changes to the terms of service are enforceable, as it is difficult to show actual notice or consent. Clickwrap agreements for new amendments provide a higher level of protection, but hosts should ensure that cookies track whether users have actually verified that they have reviewed updates to the amended agreement and accepted their terms. Direct emails notifying users of any changes may provide additional protections, but may be insufficient on their own and may require showing that a user actually received and opened the email. Ultimately, a tiered approach to informing users will ensure the greatest protection for a website host and that any changes to the website’s terms of service are binding.

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