In Berman v. Freedom Fin. Network, LLC, No. 20-16900, 2022 U.S. App. LEXIS 9083, at *12-14 (9th Cir. Apr. 5, 2022), the 9th Circuit addressed the enforceability of an arbitration agreement set forth on a website that allowed the consumer to click-through the operator’s various policies and the arbitration.  The Court of Appeals stated the rule as follows:

The most straightforward application of these principles in the online world involves so-called “clickwrap” agreements, in which a website presents users with specified contractual terms on a pop-up screen and users must check a box explicitly stating “I agree” in order to proceed. See Nguyen, 763 F.3d at 1175-76. In that scenario, the consumer has received notice of the terms being offered and, in the words of the Restatement, “knows or has reason to know that the other party may infer from his conduct that he assents” to those terms. Restatement (Second) of Contracts § 19(2). As a result, courts have routinely found clickwrap agreements enforceable. See Meyer, 868 F.3d at 75. At the other end of the spectrum are so-called “browsewrap” agreements, in which a website offers terms that are disclosed only through a hyperlink and the user supposedly manifests assent to those terms simply by continuing to use the website. See Nguyen, 763 F.3d at 1176. Courts are more reluctant to enforce browsewrap agreements because consumers are frequently left unaware that contractual terms were even offered, much less that continued use of the website will be deemed to manifest acceptance of those terms. Id. at 1178 (noting “courts’ traditional reluctance to enforce browsewrap agreements against individual consumers”). To avoid the unfairness of enforcing contractual terms that consumers never intended to accept, courts confronted with online agreements such as those at issue here have devised rules to determine whether meaningful assent has been given. Unless the website operator can show that a consumer has actual knowledge of the agreement, an enforceable contract will be found based on an inquiry notice theory only if: (1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms. See Meyer, 868 F.3d at 75; Nguyen, 763 F.3d at 1173 (refusing to enforce an arbitration provision to which the consumer “did not unambiguously manifest assent”). As the Second Circuit has explained, “[r]easonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility.” Specht, 306 F.3d at 35. Defendants did not contend, in their motion to compel arbitration, that plaintiffs had actual knowledge of an agreement to arbitrate. And, as explained below, defendants failed to show that either of the conditions necessary for finding an enforceable agreement based on inquiry notice were satisfied.

The Court of Appeals found that the website rules failed the test.

Defendants did not contend, in their motion to compel arbitration, that plaintiffs had actual knowledge of an agreement to arbitrate. And, as explained below, defendants failed to show that either of the conditions necessary for finding an enforceable agreement based on inquiry notice were satisfied.  Reasonably conspicuous notice. The webpages reproduced in Appendix A and Appendix B did not provide reasonably conspicuous notice of the terms and conditions for two reasons. First, to be conspicuous in this context, a notice must be displayed in a font size and format such that the court can fairly assume that a reasonably prudent Internet user would have seen it. See id. at 30; Nguyen, 763 F.3d at 1177. The text disclosing the existence of the terms and conditions on these websites is the antithesis of conspicuous. It 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. Nguyen, 763 F.3d at 1178 n.1.   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. Because “online providers have complete control over the design of their websites,” Sellers v. JustAnswer LLC, 73 Cal. App. 5th 444, 289 Cal. Rptr. 3d 1, 16 (Ct. App. 2021), “the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers,” Nguyen, 763 F.3d at 1179. The designer of the webpages at issue here did not take that obligation to heart.  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. See Sellers, 289 Cal. Rptr. 3d at 29. Because our inquiry notice standard demands conspicuousness tailored to the reasonably prudent Internet user, not to the expert user, the design of the hyperlinks must put such a user on notice of their existence. Nguyen, 763 F.3d at 1177, 1179.  A web designer must do more than simply underscore the hyperlinked text in order to ensure that it is sufficiently “set apart” from the surrounding text. Sellers, 289 Cal. Rptr. 3d at 29. Customary design elements denoting the existence of a hyperlink include the use of a contrasting font color (typically blue) and the use of all capital letters, both of which can alert a user that the particular text differs from other plain text in that it provides a clickable pathway to another webpage. See id. (finding “Terms of Service” insufficiently conspicuous because it did not use all capital letters or contrasting font color). Consumers cannot be required to hover their mouse over otherwise plain-looking text or aimlessly click on words on a page in an effort to “ferret out hyperlinks.” Nguyen, 763 F.3d at 1179. The failure to clearly denote the hyperlinks here fails our conspicuousness test. Cf. Meyer, 868 F.3d at 78-79 (finding hyperlinks reasonably conspicuous because they were both in blue and underlined).  Unambiguous manifestation of assent. 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. See Specht, 306 F.3d at 29-30. The presence of “an explicit textual notice that continued use will act as a manifestation of the user’s intent to be bound” is critical to the enforceability of any browsewrap-type agreement. Nguyen, 763 F.3d at 1177.  The webpages here did provide advisals concerning the terms and conditions in proximity to the “continue” buttons. On the webpage Russell visited, the notice appeared directly above the button, and on the webpage Hernandez visited it appeared above the button separated by several intervening lines of text. But “even close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice.” Id. at 1179.  Rather, the notice must explicitly notify a user of the legal significance of the action she must take to enter into a contractual agreement. The notice did not do so here. Both webpages stated, “I understand and agree to the Terms & Conditions,” but they did not indicate to the user what action would constitute assent to those terms and conditions. Likewise, the text of the button itself gave no indication that it would bind plaintiffs to a set of terms and conditions. This notice defect could easily have been remedied by including language such as, “By clicking the Continue >> button, you agree to the Terms & Conditions.” See, e.g., Meyer, 868 F.3d at 78-80 (concluding that an enforceable agreement was formed where the mobile app explicitly warned, “By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY”).  Defendants assert that the presence of the phrase “which includes mandatory arbitration” in the textual notice distinguishes the webpages at issue here from those rejected by other courts. This argument is unavailing, as it fails to appreciate the key issue in this appeal. The question before us is not whether Hernandez and Russell may have been aware of the mandatory arbitration provision in particular, but rather whether they can be deemed to have manifested assent to any of the terms and conditions in the first place. Because the textual notice was not conspicuous and did not explicitly inform Hernandez and Russell that by clicking on the “continue” button they would be bound by the terms and conditions, the presence of the words “which includes mandatory arbitration” in the notice is of no relevance to the outcome of this appeal. We conclude that the design and content of the webpages Hernandez and Russell visited did not adequately call to their attention either the existence of the terms and conditions or the fact that, by clicking on the “continue” button, they were agreeing to be bound by those terms. The district court properly denied defendants’ motion to compel arbitration because an enforceable agreement to arbitrate was never formed.