TOS Formation Isn’t Hard to Do Right…Is It?–Tejon v. Zeus

Zeus Networks is a paywalled video site of “influencer”-produced content. The plaintiffs allege that Zeus violated the VPPA. Zeus tries to direct the lawsuit to arbitration per its TOS, but the court says its TOS failed.

Here’s the screenshot at issue:

Some obvious problems with this UI. First, the call-to-action font size is small (though not the smallest on the page–the login text at the bottom appears to be even smaller), and grey font on a black background isn’t the most legible. Second, the call-to-action references “subscribing,” but users can’t take that action on this page, creating a spatial discontinuity like the problem in the Campos v. Tubi case.

The court starts with a standard invocation of the wrap taxonomy and, like most other courts, chunks the taxonomization: “The agreement here is a form of a browsewrap agreement because it provides a link to a separate webpage with terms and conditions and does not require the user to click an acknowledgment checkbox.” Nope. If we’re going to use the wrap taxonomy even though it’s trash, this should be characterized as a “sign-in-wrap,” not a browsewrap. Also, an acknowledgement checkbox would have made it a “clickwrap,” which is not the only way to form a TOS. As usual, the court then immediately disregards the taxonomization and turns to the standard formation considerations, like whether users had sufficient notice of the TOS. In other words, the wrap taxonomization was irrelevant to the outcome–again.

It’s still not good news for Zeus. The court says grey underlined text doesn’t signal hyperlinks:

it is generally recognized that hyperlinks are usually displayed in a blue font, as a means to stand out from the rest of the page. Here, the hyperlinks and related text are both in light gray font, not blue, and the hyperlinks are underlined but not displayed in all capital letters. Merely underlining the hyperlinks, without more, does not provide sufficient contrast from the other gray font of identical size and capitalization on the webpage and black background.

Blue is not only color that can signal a hyperlink. Courts have blessed font colors across the rainbow. The ALL CAPS reference is odd; that’s rarely used or expected for TOS implementations. However, several other courts have said that underlining, without more, isn’t enough to signal a hyperlink, including Berman, Chabolla, and StubHub (only Berman was cited).

The court also objects to the call-to-action placement:

the hyperlinks are placed beneath, rather than above, the two large bright red subscription buttons containing the monthly and annual subscription options in larger, bolded font. Under these circumstances, a reasonable user would not be on inquiry notice that there were hyperlinks on Zeus’ subscription webpage containing important terms and conditions that the user should click….

Putting the call-to-action above the buttons would be easy enough to do. Better yet, the call-to-action should be on the subscription page, not this page. Best of all would be a second click acknowledging TOS formation (or an interstitial page).

Finally, the court takes issue with the layered notice approach:

This placement of the hyperlinks beneath such highly conspicuous action buttons—as well as the language after the hyperlinks regarding specific payment details and the age of the user—would lead a reasonably prudent person to think that this very webpage contains the terms and conditions of the subscription, not a separate webpage. In other words, the factors described above suggest to a user that once they subscribe and read the language underneath the subscription buttons, the user has considered all relevant conditions to the subscription, and the subscription process is over. This is the opposite of putting a user on inquiry notice of an arbitration provision located on a separate page via hyperlink

Here, the court seems to be penalizing Zeus for including a salient detail about subscriptions alongside the call-to-action. Consumer protection regulators and advocates have long clamored for layered notices, allegedly because they increase consumer understanding, but rulings like this illustrate the ongoing risks of using layered notice. Proceed with caution.

I don’t know how this UI got approved, either from an aesthetic or legal standpoint. Did the lawyer cut corners? Was the lawyer out-of-date on best practices? Did the marketing team ignore the lawyers or, worse, proceed without legal support? UIs like this are a minor tragedy because TOS formation problems are so easily avoided–and so important to avoid. You can definitely do better than this.

Case Citation: Tejon v. Zeus Networks LLC, 2024 WL 1293757 (S.D. Fla. March 25, 2024)

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