Court Holds Change-of-Terms Provision Cannot Bind Parties to New Browsewrap Agreement

The Ninth Circuit recently held that a consumer was not bound by updated terms merely because she accessed a website that contained new terms in a “browsewrap” agreement on the website.  A browsewrap agreement is one that is attempted to be enforced against a website user by virtue of his/her use of a website.  Contrast that with a clickwrap agreement – one that requires a user to affirmatively assent to its terms (e.g., by checking a box).

Rachel Stover v. Experian Holdings, Inc., No. 19-55204 (9th Cir. Oct. 21, 2020).

Facts

In 2014, Rachel Stover purchased a credit monitoring product called Experian Credit Score. She affirmatively assented to certain terms of use that included an arbitration clause requiring arbitration of any claims arising out of the transaction “to the fullest extent permitted by law” and a change-of-terms provision stating that “[e]ach time” she “accessed . . . the . . . Product Website,” she manifested to “the then-current” terms of the agreement.

She cancelled her subscription in 2014 and accessed the website again in 2018.  She subsequently filed a class action lawsuit in California federal court.

Procedural History

Experian moved to compel arbitration and the District Court granted that motion on the basis that the dispute was governed by Experian’s 2018 terms of use because the change-of-terms clause in the 2014 terms made the 2018 operative as soon as Ms. Stover logged onto the website in 2018.

On appeal, the Ninth Circuit affirmed the lower court ruling.  But, on different grounds.  Specifically, the court held that “[i]n order to bind parties to new terms pursuant to a change-of-terms provision, consistent with basic principles of contract law, both parties must have notice that the terms have changed and an opportunity to review the changes.”

Here, “[b]ecause Stover ha[d] not alleged that she had such an opportunity, the 2018 terms did not form a valid contract.”

The court also held “that mere inquiry notice of changed terms is [not] enough to bind the parties to them” and that “Stover had no obligation to investigate whether Experian issued new terms without providing notice to her that it had done so.”

The 2014 terms applied.

Richard B. Newman is an advertising practices attorney at Hinch Newman LLP. Follow FTC defense attorney on National Law Review.

Informational purposes only. Not legal advice. May be considered attorney advertising.