TurboTax's Terms of Service Fell in Court Because Not Underlined

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In Terms of Service, little details can make massive difference, as TurboTax found out on Thursday. They lost in court because the hyperlink to their Terms of Service was not underlined. Take a look.

It was blue, clickable and there was nothing inherently unfair in the Terms. Nevertheless, a federal judge in California decided that, without the underline, the Terms were not conspicuous enough to bind consumers and stand in court.

I’ll describe what happened in the case and will then outline what the court said about the legal requirements for your Terms of Use to stand.

I. What happened?

There is a class action lawsuit against Intuit Inc., the company behind TurboTax, going on now. Plaintiffs allege that Intuit fooled a class of consumers into paying for its tax preparation services when they were entitled to use its free filing option. They filed in a court but Intuit wanted to arbitrate instead.  A section in Intuit’s Terms states that all disputes must be resolved by arbitration instead of court. It’s cheaper for companies this way, and confidential.

So, Intuit filed a motion to compel arbitration because that’s what the Terms state. But plaintiffs persuaded the judge that the link to the Terms in the screen above was not conspicuous enough and, therefore, the Terms should not be enforced where it says about arbitration.

II. ToS “Gold Standard”

Here is how the federal court outlined the legal requirements for your Terms to be conspicuous enough to stand in court.

Sign-in wrap agreements are more likely to be upheld “where the hyperlinked ‘terms and conditions’ is next to the only button that will allow the user to continue use of the website” and where the “user . . . was presented with hyperlinks to the ‘terms of use’ on subsequent visits.” It weighs in Intuit’s favor that the sign-in page featured an explicit statement that signing in constituted assent to the Terms.  Another factor going to Intuit’s credit is that their hyperlink was immediately under the sign-in button, every time consumers signed in.

But that’s not always enough for the hyperlinked text to be “reasonably conspicuous” enough for your Terms stand. Court cites a bunch of cases where the “gold standard” for the hyperlinks to Terms to be sufficiently conspicuous is when they are blue and underlined. Cullinane v. Uber Techs., Inc., 893 F.3d 53, 63 (1st Cir. 2018). Finally, the judge says TurboTax’s lack of underlining falls short of the gold standard.

The Court found other factors against TurboTax’s hyperlinks:

– That they were the lightest color on the entire sign-in screen. A PhD expert confirmed a common-sense conclusion that the fact that the Terms were lighter shade of gray made the whole thing less prominent to consumers.

TurboTax webpage contained multiple, confusingly similar hyperlinks in order to divert consumers from the bait-and-switch offer of a free tax return.

Less than 0.55% of users logging into TurboTax’s website actually clicked on the hyperlink to the Terms.  The Court concludes that the fact that so few users actually clicked on the hyperlink supports the inference that many of them did not notice it.

So, the main official reason TurboTax lost is because of no underline. Blue AND underlined is the judicial “gold standard.” And it better not be a light blue!

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