Holy Smokes: Subway Franchise’s Arbitration Effort Defeated, in part, By Mandatory EWC Provision that “Consent Not a Condition of Purchase”

You just can’t make this stuff up.

As TCPAWorld.com readers are well aware, the FCC’s express written consent rules require a disclosure to the consumer that consent is not required for the purchase of any good or service. It turns out that mandatory language may actually defeat contract formation, at least in the context of a call to action display introducing additional terms and conditions.

In fairness, the call to action display in Soliman v. Subway Franchisee Adver. Fund Trust Ltd., No. 3:19-cv-00592 (JAM), 2020 U.S. Dist. LEXIS 38183 (D. Conn. March 5, 2020) had a lot of problems. In that case a Subway franchise sought to enforce arbitration against a consumer that had purportedly accepted an arbitration provision by texting a keyword to a shortcode found on a call to action display. Way down at the bottom of the display was tiny little letters alerting—sort of—the consumer of certain terms and conditions in connection with the text club the consumer joined by texting the keyword. Because the call to action display was a static sign, however, the terms and conditions—including the arbitration clause—were inaccessible via a hyperlink and could only be obtained if the consumer entered a lengthy url into a smartphone web browser in the store. Even if the consumer did that, however, the page the consumer would encounter would display that the terms were regarding “the use of the website,” and said nothing about the promotional text club the consumer was joining. Gee whiz.

Predictably the consumer filed a TCPA class action after receiving texts in connection with the promotional club she had joined by supplying her phone number and argued that the arbitration clause in the terms and conditions were not binding on her since there was no way she could have accessed it without herculean effort. The Court agreed and concluded the clause was unenforceable. Here’s the key (pretty convincing) analysis:

First, the consumer would have to have been aware of and capable of reading the plain, small-print disclaimer in the advertisement, which is dwarfed by the surrounding colorful text and imagery and which references terms and conditions only at the end of the second line. Second, if the consumer happened to read the notice, she would have to have inferred that the vague reference to terms and conditions applied to the promotional offer, notwithstanding the immediately preceding language that “[c]onsent not required to buy goods/svcs.” Third, after discovering the notice and determining it might bind her if she accepts the offer, the consumer would have to have typed each character of the tiny URL—which spills over from the second into the third line of the disclaimer—into a web browser on her smartphone, typo-free and in a Subway store with decent cell or internet service, or else recorded the URL and accessed it elsewhere. Fourth, the consumer would have to have ignored the bold, all-caps descriptor at the top of the linked webpage which states that the terms are “FOR THIS WEBSITE,” suggesting by implication that they do not apply to the promotional offer at hand but rather to her use of Subway’s website. Fifth, the consumer would have to have jumped (via hyperlink) or scrolled several screens down just to find the arbitration clause. All these obstacles dispel any conclusion that the arbitration clause was reasonably conspicuous.

Ok so lots of avoidable mistakes here folks. As I’ve said repeatedly on the lecture circuit—there is no reason to hide your terms and conditions, especially consent. Consumers know that there will be strings attached to promotional offers and they know they will receive automated texts when they converse with a short code using their smartphone. So just disclose those facts up front to make sure you can enforce your provisions down the road.

But the really interesting take away here for everyone is the Court leaping on the “[c]onsent not required to buy goods/svcs” language as potentially confusing to consumers. Because of the way the call to action display was structured—at least in the court’s mind—the “consent not required” language defeated any inference that the flat display of a terms and conditions URL bound the consumer to the terms. The analysis in the decision is a bit terse but it goes something like this: the consumer was never specifically told that the terms and conditions were accepted as part of the keyword submission and, as such, any disclosure suggesting that acceptance of any terms is not required to obtain a good or service can be used to defeat an intention by the consumer to contract. Make sense?

Soliman probably goes a bit too far with its use of the “consent not required” language, but it is a good lesson to everyone to plainly disclose that the terms and conditions are being accepted by the use of the keyword. Failure to do so can result in consent and even an arbitration provision being unenforceable.

One last note here: Subway’s disclosures have taken quite a bit of heat lately. I recently wrote about Subway’s website disclosures in connection with a similar promotional text club.The Court there also refused to enforce arbitration due to similar issues of confusion. Keep the hyperlinks visible and close to the button folks.