District Court Rules Hyperlinks to Apps Terms of Service were Clear and Visible

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On February 23, the U.S. District Court for the Eastern District of New York ruled that the parties must arbitrate class claims regarding alleged fraudulent transactions on app users’ accounts. The plaintiffs – users of the defendants’ mobile payment platform who claimed that third parties had fraudulently withdrawn funds from their app accounts – alleged that the defendants’ inadequate dispute resolution process “falsely imposes on the user to prove that a disputed transaction was unauthorized” in violation of EFTA and NY Gen. Bus. Act § 349. Defendants, however, countered that plaintiffs had agreed to arbitrate any dispute related to their enforcement accounts, and decided to compel arbitration and dismiss the claim. The court analyzed the applicable registration flows and ruled that by registering for the apps, users agreed to unambiguous terms of service, which included an arbitration agreement presented in a hyperlinked clickable URL. The court rejected the plaintiffs’ assertion that a reasonably prudent smartphone user would not think to click on the terms of service hyperlink, stating that the hyperlink for both apps provided reasonably clear and visible interfaces. The court further found that the claims were subject to arbitration because the claimants had specifically consented to the arbitration provisions and the parties had agreed to refer any issues of arbitrability to an arbitrator.

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