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Consumer Arbitration Agreements: 4.1.1 Introduction

The Federal Arbitration Act (FAA) was not enacted to force parties into arbitration, but to enforce parties’ voluntary agreements to arbitrate specified disputes. “Arbitration is simply a matter of contract between parties; it is a way to resolve disputes—but only those disputes—that the parties have agreed to submit to arbitration.”1

Consumer Arbitration Agreements: 4.3.1 Assent by Signing the Agreement

“Assent must be manifested by something. Ordinarily, it is manifested by a signature.”30 Subject to a number of defenses described in this subsection, a party that signs an arbitration clause, as with any other agreement, is deemed to have assented to it, even if the party later claims they did not intend to agree to arbitration.31

Consumer Arbitration Agreements: 4.3.4.2 Click-Wrap

A “click-wrap” is one type of electronic agreement. The full agreement is presented on the digital screen, in a scrolling window, or via hyperlink, and the consumer cannot proceed further in making a purchase, downloading software, or otherwise completing the transaction without first clicking a button stating “I agree” or similar language. Courts have generally found such click-wrap agreements to be valid and enforceable.73

Consumer Arbitration Agreements: 4.3.4.1a Proof the Individual Visited the Website

The defendant has the burden of proof to show that it was this consumer that clicked on the website, and not some other person or even the entity operating the website impersonating the consumer.70 Even when the defendant presents evidence that the consumer was the one visiting a website, such evidence may end up being bogus or even fraudulent in a surprising number of cases.

Consumer Arbitration Agreements: 4.3.4.1 General

Arbitration agreements are increasingly being presented to consumers and workers electronically, often when the consumer or worker visits a website.59 The rules as to the formation of such electronic arbitration agreements are the same as for paper ones—the agreement is not binding unless properly formed under state law.

Consumer Arbitration Agreements: 4.3.4.3 Sign-in-Wrap

A “sign-in-wrap” agreement is like a click-wrap agreement in that the consumer must click a button to agree to a transaction, and text somewhere on the page informs consumers that by pressing the button the user assents to the linked terms and conditions. But sign-in-wrap agreements differ from click-wrap agreements in that the button the user is clicking is not labeled “agree” or “accept,” and is a button the user would have had to press anyway in order to obtain the desired service or product.

Consumer Arbitration Agreements: 4.3.4.4 Browse-Wrap

“Browse-wrap” agreements do not require the consumer to take a specific action to agree to the terms before proceeding with the transaction. Instead, a notice (which may be more or less conspicuous) is provided on the website, stating that the actual terms of the agreement are found elsewhere on that or some other website. To review the terms, the consumer must click on one or more hyperlinks, but the consumer is allowed to complete the transaction without clicking on those hyperlinks.

Consumer Arbitration Agreements: 4.3.7.1 Fraud in the Factum

Fraud in the execution of a contract, or “fraud in the factum,” occurs when one party’s misrepresentation of the character or an essential term of the contract induces conduct that appears to be a manifestation of assent.92 It is “the sort of fraud that procures a party’s signature to an instrument without knowledge of its true nature or contents.”93 As the California Supreme Court has explained:

Consumer Arbitration Agreements: 4.3.7.2 Fraud in the Inducement

A different kind of fraud, fraud in the inducement, occurs when a party makes misrepresentations about the benefits or nature of a transaction that induces the other party to assent to the agreement. Unlike fraud in the factum, this fraud does not involve trickery about what the other party is agreeing to, but rather involves trickery about why that party should agree.

Fair Credit Reporting: 5.3.1 Overview

A major FCRA purpose is to prevent reporting of inaccurate information, through implementation of accuracy requirements discussed in another chapter.298 Part of the FCRA scheme to promote accuracy is the dispute and reinvestigation process.299

Fair Credit Reporting: 5.3.2.1 Restrictions on Consumer Reporting Agencies

The FCRA restricts the reporting of information that has been disputed as part of the reinvestigation process. At the end of the reinvestigation period, the CRA must delete disputed information if the information cannot be verified, or corrected or modified in light of the reinvestigation.303 If reinvestigation does not resolve the dispute, the consumer may file a brief statement setting forth the nature of the dispute.304