In January, 2012, Zappos announced a massive security data breach that affected approximately 24 million customers. In response, users launched a class action security breach lawsuit against the company. Zappos tried to send the lawsuit to arbitration as per an arbitration clause in its user agreement. The court, however, has since struck down Zappos.com’s user agreement, leaving it without the legal protection the agreement would have provided Zappos, and denied the arbitration request.
There are two main reasons why the court struck down Zappos’ user agreement. The first is that the agreement was a “browsewrap” agreement. The second reason the court struck down the agreement was the fact that it gave Zappos the ability to unilaterally change their terms.
A “browsewrap” is an agreement that purports to bind users simply by virtue of the fact that they browse the website. A “clickwrap” or “clickthrough agreement,” on the other hand, is presented to the user in such a way that they must take some action that unambiguously signifies that they are assenting to the contract. The court has rejected the idea that a “browsewrap” agreement can bind the users of a website because with these types of agreements, there is no evidence that the user viewed, much less assented to, the agreement. Because of this, it is important to use “clickwrap” agreements to ensure that the contract holds up in court.
Read the legal document: In re Zappos.com Inc., Customer Data Security Breach Litigation
To conclude, if a website would like to rely on a user agreement, it must ensure that the user actually reads and assents to the terms in question. This is true whether that user had agreed to an older version of those terms or not. Zappos.com actually could have easily satisfied this because it requires users to click through before purchasing a product. Unfortuately, they chose a different route by using a “browsewrap” agreement. In order to meet these conditions, websites should use “clickwrap” agreements whenever possible and avoid using “browsewrap” agreements.