{"id":892,"date":"2022-10-10T14:16:08","date_gmt":"2022-10-10T18:16:08","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/techlaw\/?p=892"},"modified":"2022-10-10T14:16:08","modified_gmt":"2022-10-10T18:16:08","slug":"banks-clickwrap-agreement-cross-referencing-arbitration-and-class-action-waiver-provisions-may-be-enforceable","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/techlaw\/2022\/10\/10\/banks-clickwrap-agreement-cross-referencing-arbitration-and-class-action-waiver-provisions-may-be-enforceable\/","title":{"rendered":"Bank\u2019s Clickwrap Agreement \u2013 Cross-Referencing Arbitration and Class Action Waiver Provisions \u2013 May Be Enforceable"},"content":{"rendered":"<p>The Second Circuit ruled that a \u201cburied\u201d hyperlink is not, alone, fatal to enforcing arbitration and class action waiver provisions contained in an agreement that is incorporated by cross-reference via a web-based contract.\u00a0 Design, layout, and content of the webpage are significant factors to determining whether the contract terms were available and conspicuous, and thus enforceable.<em>\u00a0 Zachman v. Hudson Valley Federal Credit Union<\/em>, No. 21-999 (2<sup>nd<\/sup> Cir. Sept. 14, 2022).<\/p>\n<p><u>Clickwrap Agreement and Plaintiff\u2019s Class Action Claims<\/u><\/p>\n<p>In 2012, Plaintiff opened her bank account and received an Account Agreement.\u00a0 In 2019, Plaintiff agreed to an Internet Banking Agreement (\u201cIB-Agreement\u201d) that incorporates by reference the <strong>revised<\/strong> Account Agreement. \u00a0The IB-Agreement requires the customer to click a button of the Agreement stating \u201cI agree to the above terms and conditions.\u201d<\/p>\n<p>Plaintiff filed a class action complaint alleging that Defendant-Bank HVCU\u2019s practice of collecting overdraft or insufficient funds on accounts that were not actually overdrawn violated: (1) New York General Business Law \u00a7 349 and (2) the Electronic Fund Transfer Act, 15 U.S.C. \u00a7 1693, et seq..<\/p>\n<p><u>Clickwrap Agreement and Customers\u2019 Access to Revised Account Agreement <\/u><\/p>\n<p>HVCU filed a motion to dismiss and to compel arbitration, asserting:<\/p>\n<ul>\n<li>the <strong>revised<\/strong> Account Agreement containing the arbitration agreement and class action waiver was published to its website which can be accessed via a hyperlink or via a \u201cResources\u201d tab on HVCU\u2019s website<\/li>\n<li>a physical copy of the Account Agreement may be obtained by the customer requesting a copy be mailed or going to a brick-and-mortar HVCU branch.<\/li>\n<\/ul>\n<p>HVCU did not:<\/p>\n<ul>\n<li>implement a \u201cbanner\u201d notification on the webpage<\/li>\n<li>provide a summary of any changes to the Account Agreement on the webpage where the agreement is hyperlinked<\/li>\n<li>otherwise indicate any changes had been made to the Account Agreement.<\/li>\n<\/ul>\n<p><u>District Court: Did Plaintiff Have \u201cInquiry Notice\u201d of the Provisions?<\/u><\/p>\n<p>First, the District Court ruled that the district court, not an arbitrator, determines whether a valid arbitration agreement exists.\u00a0 Second, the District Court ruled that HVCU did not establish that Plaintiff had actual notice or inquiry notice of the arbitration and class action waiver provisions.\u00a0 The District Court concluded that the hyperlink to the revised Account Agreement appeared to be buried in the IB-Agreement and thus concluded that HVCU failed to establish that Plaintiff was put on inquiry notice of the arbitration and class action waiver provisions.\u00a0 HVCU appealed.<\/p>\n<p><u>Second Circuit: Website\u2019s Layout, Content, and Design<\/u><\/p>\n<p>The Second Circuit stated that the enforceability of a web-based agreement is a fact-intensive inquiry, which includes an evaluation of the visual evidence demonstrating \u201cwhether the website user has actual or constructive notice of the conditions\u201d which often turns on \u201cwhether the design and content of th[e] webpage rendered the existence of terms reasonably conspicuous.\u201d<\/p>\n<p>Based on the evidence provided in support of the motion, the Second Circuit was unable to assess whether the relevant language and hyperlink are clear and conspicuous.\u00a0 The Second Circuit ruled that the District Court\u2019s conclusion that the provisions were \u201cburied\u201d in the IB-Agreement was inconsistent with the lack of evidence presented regarding the website\u2019s layout and design.\u00a0 The Second Circuit ruled that the District Court\u2019s ruling was premature .<\/p>\n<p>Significantly, the Second Circuit stated:<\/p>\n<ul>\n<li>agreements may be incorporated by cross-reference via web-based contracts<\/li>\n<li>as long as the layout and language of the website give the user reasonable notice that a click will manifest assent to an agreement, then clicking \u201cI agree to the above terms and conditions\u201d would bind Plaintiff to the IB-Agreement, along with the Account Agreements incorporated by reference<\/li>\n<li>screenshots \u2013 of the webpage(s) used to register HVCU customers for online banking \u2013 will show the design and content of the IB-Agreement as presented to users and thus are relevant to whether Plaintiff assented to the agreement\u2019s terms<\/li>\n<\/ul>\n<p>In sum, a picture \u2013 or here, screenshots \u2013 is worth a thousand words and will help demonstrate that the parties mutually agreed to a clickwrap agreement.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Second Circuit ruled that a \u201cburied\u201d hyperlink is not, alone, fatal to enforcing arbitration and class action waiver provisions contained in an agreement that is incorporated by cross-reference via a web-based contract.\u00a0 Design, layout, and content of the webpage are significant factors to determining whether the contract terms were available and conspicuous, and thus &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/blogs.duanemorris.com\/techlaw\/2022\/10\/10\/banks-clickwrap-agreement-cross-referencing-arbitration-and-class-action-waiver-provisions-may-be-enforceable\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Bank\u2019s Clickwrap Agreement \u2013 Cross-Referencing Arbitration and Class Action Waiver Provisions \u2013 May Be Enforceable&#8221;<\/span><\/a><\/p>\n","protected":false},"author":265,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"ppma_author":[976],"class_list":["post-892","post","type-post","status-publish","format-standard","hentry","category-infotechtelecom"],"authors":[{"term_id":976,"user_id":265,"is_guest":0,"slug":"srwiggins","display_name":"Sheila Raftery Wiggins","avatar_url":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-content\/uploads\/sites\/17\/2021\/12\/wigginssheila-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/posts\/892","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/users\/265"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/comments?post=892"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/posts\/892\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/media?parent=892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/categories?post=892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/tags?post=892"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/techlaw\/wp-json\/wp\/v2\/ppma_author?post=892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}