New Jersey Appellate Court Holds Online Consumer Arbitration Agreement To Be Unenforceable

In Wollen v. Gulf Stream Restoration and Cleaning, LLC, the New Jersey Appellate Court was required to determine whether a consumer, who selected a contractor through the HomeAdvisor service, could be compelled to arbitrate claims in accordance with the website’s terms and conditions. Drawing a distinction between websites that require one to click on to the terms and conditions in order to proceed and a “browsewrap” agreement that, while encouraging users to review the terms and conditions, does not require users to expressly manifest assent, the court held that HomeAdvisor’s arbitration requirement contained in the terms and conditions was not enforceable.

Asserting that its review was predicated upon a “fact-intensive inquiry,” the court held that, at least in this consumer context, a button adjacent to a statement that “by submitting this request, you are agreeing to our Terms & Conditions” which was “offset in blue font and acted as a hyperlink to a separate seven-page document,” was insufficient to constitute an agreement to arbitrate. According to the court, “[a]lthough the terms of the hyperlink, ‘Terms & Conditions’ were displayed in ‘blue font’ against a white background, those terms were not underlined, bolded, or enlarged,” and thus were not “clear and unmistakable.” Similarly, for the court, “the statement, ‘By submitting this request, you are agreeing to our Terms & Conditions,'” did not constitute an “indication that the user was required to read the terms and conditions before submitting her request for service professionals.”

In conclusion, the court noted as follows:

“Our decision should not be interpreted to suggest that a consumer contract cannot be formed by reference to a hyperlinked document, or that we are invalidating browsewrap agreements in toto. At the very least, however, the internet user should be directed in words – and not just by font of a different hue – to click on that hyperlink. In the alternative, the hyperlinked document, itself, should contain some semblance of an acknowledgment, or inability to submit a request unless the user scrolls through the terms and conditions at issue.”