Like many, you've probably purchased a new tech product, set it up, and in doing so, accepted the manufacturer's terms and conditions without reading them. A recent federal case out of Washington (In re: Wyze Data Incident Litigation, Case No. C20-0282-JCC (W.D. Wa. 2020) sheds some light on the type of things that you've probably agreed to in such situations, as well as what the practical impact could be for businesses that utilize similar terms and conditions.
Wyze manufactures internet-enabled security cameras which require users to create a user account prior to activating them. When registering for the user account, Wyze collects users' personally identifiable information (PII), including usernames, e-mail addresses, and WiFi network details. As part of the sign-up process, users are required to check a "clickwrap agreement" indicating that they "agree" to Wyze's terms and conditions. Within those terms and conditions is a section titled ""DISPUTE RESOLUTION AND ARBITRATION/WAIVER OF CLASS ACTION AND JURY TRIAL" which provides that 1) the user agrees to "exclusively arbitrate all disputes and claims," 2) the provision is "mandatory and not permissive," and that 3) any user that wishes to opt-out of the provision needs to notify Wyze within 10 days of accepting the terms and conditions.
In December 2019, Defendants unintentionally exposed user PII in a data breach. Several class action lawsuits were filed against Wyze asserting claims including negligence, invasion of privacy, and breach of implied contract, and the cases were ultimately consolidated into the Washington matter. Wyze moved to compel arbitration and dismiss, arguing that that by accepting its terms and conditions, the Plaintiffs individually agreed to arbitrate their claims. The Plaintiffs opposed, arguing that they never agreed to Wyze's terms and conditions and, even if they did, the arbitration provision is procedurally unconscionable. The Court sided with Wyze.
The Court first pointed out that courts have consistently upheld arbitration provisions contained in clickwrap agreements, and such an agreement is enforceable as long as the user had the opportunity to read it. The Court also noted that none of the named Plaintiffs opted-out of the agreement and described the evidentiary support that it believed Wyze put forward to win the motion. Specifically, the Court found that Wyze provided sufficient evidence to show that any person who had user account could not have accessed his or her account without, at some point, clicking a box indicating that he or she agreed to its terms and conditions. The Court rejected Plaintiffs' counter-argument which suggested that for Wyze to meet its evidentiary burden, it must have evidence of individualized acts of assent. Finally, the Court ruled that whether or not the the arbitration provision is procedurally unconscionable is an issue for arbitration. The matter now heads to arbitration on the substance of Plaintiffs' claims.
Clickwrap agreements are commonplace in today's day-and-age, and the law has evolved to address a myriad of issues which they raise. At the end of the day, it's important for consumers to know that such agreements are enforceable and that they should be read carefully, and it's similarly important for businesses to draft the agreements carefully to afford themselves of all of the protections that they are entitled to under the law.
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