Are Digital Signatures Legally Binding?

Legal Information: MessageBuy, Inc, its employees and affiliates, are not a law firm.  The information provided on this website does not, and is not intended to, constitute legal advice; instead all information, content, and materials available on this site are for general and informational purposes only. Readers of this website should contact their attorney to obtain advice about SMS, MMS, TCPA or any other legal matters. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction.  

Over the past few years, online companies and digital contracts have become popular for their efficiency. The majority of online companies use some sort of clickthrough or clickwrap agreement to guarantee a secure data connection and consent from the consumer. But people often wonder if these actions hold the same weight as their concrete counterparts. Is clicking “I agree” the same as a signature on a document? Is it legally enforceable?

What exactly is a clickthrough agreement?

A clickwrap or clickthrough agreement is an agreement used for software licensing, websites, and other online companies. It requires the website user or buyer to agree to terms and conditions before completing a purchase or continuing through to their website.

Is it legally binding?

By clicking “I agree” or some variation of it, you have agreed to abide by all of the company’s terms and conditions. Ever since the federal Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000, electronic contracts, electronic signatures, and other electronic records are legally the same as their paper counterparts.

What do digital signatures have to do with the TCPA for Text Messaging?

The Telephone Consumer Protection Act of 1991 (TCPA) limits the use of prerecorded or automated voice messages, fax machines, automatic dialing systems, SMS text messages, and MMS text messages. The bottom line of the act is that a business needs some form of consent (implied, express, or express written) in order to text or call their customers, and that consent must be given with a digital signature. By agreeing to the terms and conditions of a company or giving a phone number, the customer is most likely giving consent for the company to contact them in some form or another.

Where do we use clickthrough agreements?

At the bottom of our website, there is a link that shows our “Terms”. We state the use of our clickthrough agreements during the subscription stage of a buyer’s journey. When someone signs up for our software, they are agreeing to all of our terms and conditions.

To learn more about how clickwrap agreements hold up in court, check out the court cases linked below:

Feldman v. Google, Inc

Feldman (Plaintiff) argued that since he did not have notice of and didn’t consent to the terms of agreement with Google, Inc (Defendant), the online agreement which he must have clicked on before he could place his ads on Google, Inc was not binding. Feldman bought advertising from Google, Inc in order to attract clients for his law practice. Each time an internet user searched and clicked on Google for keywords purchased by Feldman, he was charged for the click. However, Feldman held the view that he was a victim of “click fraud” which means when competitors or pranksters repeatedly click on the ad, even though they are not interested in his services. This drove up Feldman’s advertising costs and discouraged him from advertising. The court concluded that Feldman had reasonable notice of the terms and indicated his consent. Therefore, Google's clickwrap agreement was enforceable.

Bragg v. Linden Research, Inc.

Linden Lab, an online virtual world service provider of Second Life terminated the account of Marc Bragg when it was discovered that he found a way to buy land at a lower-than-market price in the virtual world. Linden Lab argued that Bragg had violated their Terms of Service by URL-hacking the land auction website. The court decided that the Terms of Service’s mandatory arbitration provision was unenforceable, and that interaction with a person in a virtual world can satisfy a state’s “minimum contacts” requirement for personal jurisdiction.

Specht v. Netscape Communications Corporation

Specht and others (Plaintiffs) alleged that because they downloaded Netscapes (Defendant) SmartDownload program, along with Netscape Communicator, Netscape was able to unlawfully eavesdrop on their internet communications. Because of the way that Netscape had its download set up, the Plaintiffs were not required to read the full terms of the contract before they clicked the download button. The court found that the downloading of software did not constitute an acceptance of Netscape’s terms and conditions.

Drazen v., LLC

This case is specific to the TCPA about text messaging and consent with digital signatures. Plaintiffs Drazen, Bennett, and Herrick allege that, LLC (Defendant) violated The Telephone Consumer Protection Act by placing phone calls and sending text messages to cellular telephone numbers without the consent of the recipients. GoDaddy denies any wrongdoing whatsoever and has agreed to come to a settlement to avoid the risks and costs that come with further litigation. The court has yet to decide who is right.