Banking and Finance Law Daily Website visit did not bind consumer to new contract terms with Experian
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Thursday, October 22, 2020

Website visit did not bind consumer to new contract terms with Experian

By Nicole D. Prysby, J.D.

By merely visiting the Experian website, a consumer did not create a new binding contract with Experian, notwithstanding an earlier contract between the parties that stated that a website visit was sufficient to bind all parties to then-current terms.

Addressing an issue of first impression, the U.S. Court of Appeals for the Ninth Circuit held that a single website visit four years after assent to a contract containing a change-of-terms provision was not enough to bind the parties to terms in the then-current version of the contract of which the visitor is unaware. A consumer purchased a credit service from Experian in 2014 and agreed to the terms and conditions. In 2018, she sued Experian, alleging violations of the Fair Credit Reporting Act (FCRA). The terms and conditions in effect in 2014 required arbitration of all claims and stated that each time the consumer visited the Experian website, she would be agreeing to the then-current terms. Because the consumer had visited the Experian website in 2018, and the 2018 terms excluded FCRA claims from arbitration, she argued that she and Experian were bound by the 2018 terms. But the Ninth Circuit concluded that merely visiting the website was not sufficient to bind the parties to new terms. The consumer also argued that her FCRA claims were not subject to arbitration because a contract that purports to waive a person’s right to seek public injunctive relief in court is unenforceable under California law. The court rejected that argument as well, finding that the contract permitted judicial resolution of claims for public injunctive relief, but the consumer failed to allege Article III standing for such a claim (Stover v. Experian Holdings, Inc., Oct. 21, 2020, Smith, M.).

A consumer purchased the "Experian Credit Score" service in 2014 and assented to the terms and conditions in effect at the time. The 2014 terms included a class action waiver, and a provision that all claims were subject to arbitration and that each time the consumer visited the Experian website, she would be agreeing to the then-current terms. The consumer cancelled her subscription later in 2014 and accessed the Experian website again in 2018. At the time she accessed the website in 2018, the arbitration provision of the terms had changed to accommodate a carve-out for disputes arising out of or relating to the Fair Credit Reporting Act. The consumer filed a class action, alleging state-law claims and a violation of the FCRA provision requiring consumer reporting agencies that provide credit scores to "supply the consumer with a credit score that assists the consumer in understanding the credit scoring assessment of the credit behavior of the consumer[.]" 15 U.S.C. § 1681g(f)(7)(A). Experian moved to compel arbitration of the claims.

The federal district court decided that the claims should go to arbitration. The court held that the 2018 terms applied because of the plain language of the 2014 terms that assumed assent to new terms based on the consumer’s use of the website. But the court held that the consumer’s claims were not within the carve-out from arbitration because the claims did not arise out of "information contained in [her] consumer disclosure or report" using the definition of those terms found in the FCRA. On appeal, Experian argued that a mere website visit after the parties terminated their business relationship is not enough to activate a change in terms. The consumer argued that the district court did not err by holding that the 2018 terms governed the dispute, but that the court should not have compelled arbitration because, under the rule in McGill v. Citibank, N.A., 393 P.3d 85, 94 (Cal. 2017), a contract provision that purports to waive the statutory right to seek public injunctive relief under the California Unfair Competition Law is invalid and unenforceable under California law.

Consumer must arbitrate claims. The Ninth Circuit held that the consumer’s visit to the website was not sufficient to bind the parties to new terms. In order for the changes in terms to be binding pursuant to a change-of-terms provision in the original contract, both parties to the contract—not just Experian—must have notice of the change in contract terms. The consumer’s complaint did not allege that she had notice of the new terms; therefore, she failed to demonstrate that the 2018 terms constituted a valid contract. The 2014 contract terms thus applied.

The 2014 terms required that all disputes be subject to arbitration, to the fullest extent allowed by law. A contract that purports to waive a person’s right to seek public injunctive relief in court is unenforceable under California law. But the court found that the consumer lacked the Article III standing required to seek public injunctive relief in federal court. Her arguments that that the agreement is unenforceable on its face and as applied to the specific relief she seeks were meritless. The arbitration agreement does not flatly prohibit a plaintiff seeking public injunctive relief in court. Instead, it subjects to arbitration all disputes to the fullest extent allowed by law—which would presumably exclude claims for public injunctive relief in California. This means that the arbitration provision is not facially unenforceable. Furthermore, the consumer’s complaint did not allege the threat of future harm that is required for Article III standing in a case seeking public injunctive relief. Because she had not done so, the McGill rule did not preclude arbitration of her California claim.

The case is No. 19-55204.

Attorneys: Joseph C. Bourne (Pearson Simon & Warshaw, LLP) for Rachel Stover. Edward San Chang (Jones Day) for Experian Holdings, Inc., Experian Information Solutions, Inc. and Consumerinfo.Com, Inc., d/b/a Experian Services

Companies: Experian Holdings, Inc.; Experian Information Solutions, Inc.; Consumerinfo.Com, Inc., d/b/a Experian Services

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