Subway Can’t Enforce Arbitration: Appellate Court Reminds that Consumer Experience is Just as Important as Content of Disclosure
Those of you who have attended the Masterclass series on express consent the last few months know there are two critical pieces to capturing enforceable consent: i) content; and ii) consumer experience.
As I’ve been preaching–and as you can plainly see in the 2020 Year End Review–the biggest trend from 2020 TCPA case law was the refusal of many courts to enforce disclosures that were not prominently displayed, or that were on websites that actively took a consumer’s eyes away from the disclosure. And this is separate and apart from so-called “dark patterns” where consumers are tricked or mislead into providing consent they did not intend to provide.
As I’ve laid out in the Masterclass, here are some tips to make sure your disclosures are enforceable:
Disclosure must be close to the acceptance button—while “above the button” is not necessarily required it is preferred;
Hyperlinks must be obvious and underlined or capitalized;
Disclosure must be in readable font—both in terms of size and color against background;
Website should not be cluttered or otherwise full of impertinent language in different font sizes and colors that might distract from the disclosure;
Disclosure should actually and clearly explain that by clicking the button the customer will actually be accepting the disclosure;
Disclosure must be apparent at the time the user clicks the submit button and cannot pop up only before or after the button is presented.
Those may all seem pretty basic–and they are– but a huge number of decisions have refused to enforce disclosures recently, because folks aren’t abiding by these rules.
Here’s a for instance.
So back in March of last year a district court refused to enforce an arbitration provision embedded on a website whose URL was provided at the bottom of the call to action display above. See Soliman, 2020 U.S. Dist. LEXIS 38183 (D. Conn. March 5, 2020). The Court found that the display “actively” took attention away from terms and conditions, which were at the bottom of the page and the prominent language did nothing to alert the consumer they were accepting any fine print by responding to the display.
Subway appealed the district court’s refusal to enforce arbitration but ran into a brick wall at the Second Circuit COA. In Soliman v. Subway Franchisee Adver. Fund Trust, Ltd., No. 20-946, 2021 U.S. App. LEXIS 16943 (2nd Cir. June 8, 2021) the Appellate Court upheld the denial of arbitration provision where visual elements in call to action display lead a consumer’s eyes away from disclosures. Further the URL containing terms and conditions was very difficult to follow—it contained numerous characters to be typed into the phone—and then once you landed on the disclosure page it referenced terms and conditions for the use of “this website” as opposed to the text message program.
Soliman is a tough loss for Subway but it is a great reminder that courts are taking a “real world” and holistic view of disclosures–including consent and arbitration disclosures. While it certainly remains the law that a consumer does not actually have to read a disclosure for it to be binding–otherwise contracts would be unenforceable these days–a consumer must be given a real opportunity to see and accept disclosures before a court is likely to enforce them.
Always happy to discuss.