INDIANAPOLIS, March 10, 2021 /PRNewswire/ — PactSafe, a leading clickwrap transaction platform that helps enterprises securely grow online transaction volume, has released its third annual Clickwrap Litigation Trends Report that uncovers how courts assess the validity of online agreements. This year’s report highlights the pandemic’s impacts on e-commerce and the resulting legal implications for digital terms of service.
Now in its third year, PactSafe’s report tracks litigation trends around clickwrap agreements, a form of electronic signature where signing to accept terms of service is replaced with checking a box. Not surprisingly, the latest report details a steadily rising need for clickwrap in 2020 and examines its usage as a result of the e-commerce surge and preferences for digital experiences.
“The pandemic thrust clickwrap into the mainstream in a way we haven’t seen before since many businesses had to pivot online in order to survive,” said Brian Powers, founder and CEO of PactSafe. “Not only did the use of clickwrap increase in 2020 but the way industries employed and defended it changed.”
At its core, clickwrap is designed to protect businesses that transact online. But, as PactSafe’s report illustrates, enforcing online terms can get complicated quickly, and legally, particularly in a year as unique as 2020.
Some of the report’s clickwrap trends include:
- Arbitration clauses were the most common type of clause companies tried to enforce in 2020, with motions to compel arbitration accounting for nearly 89% of clickwrap cases.
- Finance (e.g., Intuit, Wells Fargo, Merrill Lynch), was the top industry in 2020 to enforce its terms in court at 18%, with e-commerce (e.g., Amazon, WalMart, Shutterfly) at 15% and gig economy companies (e.g., Uber, DoorDash) at 11%.
- Poor screen design was the most commonly violated best practice in 2020 clickwrap case law, with 43% of companies unable to enforce their terms because the screens failed to put users on notice.
These trends are likely to continue into 2021, so even businesses that believe they are immune (e.g. heavily regulated industries like Finance) are facing clickwrap litigation, according to the report. And as most companies have adapted an e-commerce model for online selling and/or depend on their terms of service to protect their business, most are vulnerable to some measure of clickwrap litigation. The report highlights case law-informed best practices for businesses across industries to assess their risk factors in being litigated and their chances of successfully enforcing their online agreements in court.
The report also highlights clickwrap litigation unique to COVID and reveals how courts have been determining enforceability of online terms. Companies like Ticketmaster, Eventbrite and Uber wound up in lawsuits after customers sued, frustrated over the terms the companies tried to enforce in the wake of the pandemic. Each company fared differently in court trying to enforce its respective online agreement.
“One of the biggest takeaways from the past year and the explosion of online transactions is details really matter,” Powers said. “As the demand for clickwrap increases, businesses need to be judicious in the design and presentation of their online terms if they hope to enforce them legally.”
PactSafe is an Indianapolis-based clickwrap transaction platform that enables companies to process high volume agreements rapidly and painlessly. PactSafe helps companies like Wayfair, DoorDash, Angie’s List (Home Advisor), BMC Software and Upwork update online legal terms, track and gain acceptance of those terms, and identify areas of potential risk before they become an issue.
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