Tom Woods and Corey Day Break Down ‘Clickthrough’ Agreements and Their Pitfalls

In a new article for Law.com’s Corporate Counsel, litigators Thomas Woods and Corey Day look at “clickthrough” agreements, online statements of assent to privacy policies, terms of service, or other disclosures, which, though they have become widely used thanks to the expansion of the digital marketplace, are not without pitfalls.

Clickthroughs fall into two categories (with occasional hybrids) and allow businesses to streamline operations, while offering consumers quick access to goods and services. “Clickwrap” agreements require users to explicitly agree to terms by clicking a box, while “browsewrap” agreements imply acceptance through website usage and a posted hyperlink to terms.

Despite two decades of online contract evolution, limited case law exists that defines viable agreements. This lack of case law, coupled with technological growth, contributes to disputes’ prevalence and costs. In 2023, a study by DocuSign and Frost & Sullivan found that almost 83% of study participants reported legal disputes stemming from clickthrough agreements over the past five years, with legal fees ranging from $50,000 to over $5 million.

While no clear rules ensure enforceability of a clickthrough agreement, the U.S. Federal Trade Commission (FTC) provides guidance on clear online contract disclosures. Issues often arise in effectively providing notice to users of a website’s terms or other disclosures and determining whether those terms are “fair and reasonable.” Courts frequently analyze these matters on a case-by-case basis, focusing on user assent and the reasonableness of terms.

Woods and Day note that when creating clickthrough agreements, businesses should consider their specific services offered, demographics of users, platforms (webpages, desktop, or mobile applications) most frequently used by potential customers, and whether their terms of use change often.

The authors conclude: “As disputes arise and contracts expand to mobile applications and social media (and exposures expand in cyberspace like galaxies after the Big Bang), it is more important than ever to consult with experienced counsel to evaluate your business’s clickthrough contracts and best practices for maintenance of User consent to your company’s terms.”

You can read the full article here. (Subscription may be required.)