Gary Sgouros v. TransUnion Corporation
2016 U.S. App. LEXIS 5648
| 7th Cir. | 2016Background
- Gary Sgouros bought a TransUnion "3-in-1" credit reports/scores product online for $39.90 and completed a three‑step checkout process.
- Step 2 displayed a scrollable window titled "Service Agreement" (partially visible) and a bold disclosure saying clicking "I Accept & Continue to Step 3" authorized TransUnion to obtain his credit file; the button did not require opening or scrolling the agreement.
- A full, 10‑page "Printable Version" of the Service Agreement (accessible via hyperlink) contained, on page 8, an arbitration clause and a class‑action waiver; the first page briefly indicated an arbitration clause existed.
- Sgouros sued TransUnion under the FCRA and Illinois and Missouri consumer‑protection statutes alleging misleading conduct about the score’s usefulness; TransUnion moved to compel arbitration.
- The district court denied the motion to compel arbitration; the Seventh Circuit reviewed de novo whether an arbitration agreement was formed and affirmed the denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether clicking "I Accept & Continue to Step 3" manifested assent to the Service Agreement (including arbitration clause) | Sgouros: the button and visible page did not give reasonable notice that the click bound him to the hidden Service Agreement | TransUnion: the click constituted assent to terms shown in the scroll box / printable agreement ("clickwrap") | Held: No assent. The site failed to give reasonable notice that the click accepted the Service Agreement; the bold disclosure misled users about the click's purpose. |
| Whether access to the buried printable Agreement plus purchase/use created acceptance by conduct | Sgouros: purchase/use did not provide notice that completing the transaction would bind him to the buried terms | TransUnion: purchase and use of the site amounted to assent by conduct, citing prior cases where continued use manifested acceptance | Held: No. Unlike cases imposing assent by conduct, TransUnion’s site did not provide clear notice that purchase/use would bind the buyer to the Agreement. |
| Standard for Internet contract formation under Illinois law | Sgouros: Illinois requires objective notice that clicking or use manifests assent to terms | TransUnion: (implicitly) general contract principles allow online assent via click | Held: Illinois requires reasonable notice that a click or use manifests assent; websites must communicate terms clearly (scroll box, conspicuous link, or equivalent) before binding users. |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (arbitration is a matter of contract)
- Stolt‑Nielsen S.A. v. Animalfeeds Int'l Corp., 559 U.S. 662 (2010) (arbitration depends on parties' agreement)
- Specht v. Netscape Commc'ns Corp., 306 F.3d 17 (2d Cir. 2002) (no assent where download button did not give notice of terms buried below)
- Hubbert v. Dell Corp., 835 N.E.2d 113 (Ill. Ct. App. 2005) (online purchaser bound where hyperlinks labeled and terms were visibly indicated on multiple pages)
- Janiga v. Questar Capital Corp., 615 F.3d 735 (7th Cir. 2010) (contract formation review is de novo)
- Lee v. Intelius Inc., 737 F.3d 1254 (9th Cir. 2013) (no contract where button indicated a different, limited function and buyer lacked notice of buried terms)
- Feldman v. Google, Inc., 513 F. Supp. 2d 229 (E.D. Pa. 2007) (valid clickwrap where terms were immediately visible and accompanied by clear instruction to read and agree)