The Law and Business of Social Media
March 15, 2012 - Terms of Use

Facebooks’s Online Terms of Service Held to Be Enforceable

In the recent online contracting case of Fteja v. Facebook, Inc., a New York federal court held that a forum selection clause contained in Facebook’s Statement of Rights and Responsibilities (the “Terms”) was enforceable because the plaintiff assented to the Terms when registering to use Facebook.  The court’s analysis and holding followed the recent trend of de-emphasizing the distinction between “clickwrap” and “browsewrap” agreements and instead focusing on whether the user was provided  with actual or constructive notice of the agreement’s terms and conditions.  In this case, the result turned on whether Facebook’s Terms were reasonably communicated to the plaintiff prior to his use of the site.

The plaintiff, an active Facebook user, brought the action against Facebook in New York state court asserting that Facebook disabled his account without justification and for discriminatory reasons.  He claimed that the disabling of his account hurt his feelings, inflicted emotional distress and assaulted his good reputation among his friends and family.

Facebook removed the lawsuit to New York federal court on the basis of diversity of citizenship, and then moved to transfer the action to federal court in Northern California, citing the forum selection clause in the Terms.  Facebook argued that because the plaintiff clicked through Facebook’s registration page and expressly acknowledged that he read and agreed to the Terms (including the forum selection clause), the Terms were valid and enforceable.  The plaintiff responded that there was no proof that he agreed to the forum selection clause and that he did not remember agreeing to the Terms.

The court reviewed Facebook’s registration process, noting that after a new user provides his or her personal information and clicks an initial “Sign Up” button, he or she is directed to a security page that requires the new user to input a series of letters and numbers.  Below the box where the new user enters the letter/number combination, the page displays a second “Sign Up” button that is immediately followed by the phrase: “By clicking Sign Up, you are indicating that you have read and agree to the Terms of Service.”  The phrase “Terms of Service” is underlined, indicating that it is hyperlinked to the Terms.

After this review of Facebook’s registration process, the court then described the historical development of online contracting law, referencing the, Inc. v. Verio, Inc., Specht v. Netscape Communications Corp., and Hines v., Inc. decisions, and the importance of establishing mutual manifestation of assent.  Following this discussion, the court pointed out that Facebook’s Terms are “somewhat like a browsewrap agreement in that the terms are only visible via a hyperlink, but also somewhat like a clickwrap agreement in that the user must do something else – click ‘Sign Up’ – to assent to the hyperlinked terms,” and that, unlike some clickwrap agreements, a new Facebook user can click to assent whether or not he or she has been presented with the Terms.  Finally, the court looked at the plaintiff’s level of sophistication and stated that an Internet user whose social networking was so prolific that losing Facebook would cause him mental anguish should understand that the hyperlinked phrase “Terms of Service” really means “Click Here for Terms of Service,” thereby establishing constructive knowledge of the Terms.

The court concluded that the plaintiff’s registration for Facebook by clicking the “I accept” button constituted his assent to the Terms (including the forum selection clause) even though he may not have actually reviewed the hyperlinked Terms.  The court then, after considering the public policy ramifications of the transfer decision, held that the forum selection clause was enforceable and directed the action to be transferred to federal court in Northern California.

Key Take Aways.  While the Fteja v. Facebook, Inc. case illustrates that U.S. courts may enforce a hybrid browsewrap/clickwrap agreement even where the user does not have actual knowledge of the terms and conditions, the safest approach for a website operator is to structure its online terms of service as a traditional clickwrap agreement that requires users to scroll through the terms and conditions and then click an “I accept” button.  In situations where this structure is not commercially reasonable, the following tips can be used to help establish user assent under U.S. law through constructive knowledge of the terms and conditions of an online agreement:

  • Prominent Notice:  Include a prominent notice that cannot be skipped by users; such notice ideally should state that the use of service is subject to the hyperlinked terms of service.  Such notice should be provided in reasonably large font and contrasting colors that do not blend into the website’s background.  If possible, include an “I accept” button next to the notice.
  • Easy Access/Full Disclosure:  Provide easy access to the full text of the terms of service via a clearly identifiable hyperlink that links to a downloadable and printable version of the terms of service.  The hyperlink should be provided next to the notice and an “I accept” button (if any).
  • Readability:  Structure and phrase the terms of service so that they can be reasonably understood by users based on their anticipated level of sophistication.
  • Highlight Important Terms:  Make sure that any particularly important terms are clearly identifiable and not hidden.  If the website operator is especially concerned about an issue (e.g., enforceability of the limitation of liability provision of the terms of service), consider expressly referencing the concern as part of the general notice (e.g., “By clicking Sign Up, you are indicating that you have read and agree to the Terms of Service, including the limitations on vendor’s liability described therein”).