Why Courts Reject Online Arbitration Clauses in TCPA Cases

​The Eleventh Circuit Court of Appeals recently delivered a cautionary message to businesses relying on online arbitration agreements to avoid costly class action litigation. In Valiente v. NexGen Global, LLC, 2025 WL 3140480 (11th Cir. Nov. 10, 2025), the court affirmed a district court's refusal to compel arbitration in a Telephone Consumer Protection Act (TCPA) and Florida Telephone Solicitation Act (FTSA) lawsuit, leaving defendant NexGen exposed to potentially devastating class action damages.

As discussed in prior articles, not all online agreements are enforceable, particularly when businesses fail to provide clear, conspicuous notice of arbitration provisions and obtain unambiguous user consent. For companies facing TCPA exposure—where statutory damages range from $500 to $1,500 per violation and can quickly escalate into multi-million-dollar class actions—the enforceability of arbitration clauses with class action waivers is critical.

Article FAQs

What is the Valiente v. NexGen Global case important?

Valiente v. NexGen Global, LLC is a recent Eleventh Circuit decision where the court refused to enforce an online arbitration clause in a TCPA lawsuit, exposing the defendant to potentially devastating class action damages. The case is important because it illustrates how poorly designed online arbitration agreements can fail, leaving companies vulnerable to multi-million-dollar TCPA class action liability.

Why did the Valiente court reject the defendant’s browsewrap arbitration agreement?

The court found the browsewrap agreement unenforceable because the “Terms of Use” hyperlink appeared in small, white font at the bottom of a long and cluttered webpage, thus failing to provide conspicuous notice of the arbitration provision. Additionally, the website did not indicate that mere use of the site constituted assent to the Terms of Use.

What is the difference between browsewrap, clickwrap, and double opt-in agreements?

A browsewrap agreement binds users to terms merely through website use via a hyperlinked reference; a clickwrap agreement requires users to affirmatively click a button or checkbox labeled “I agree” to manifest explicit consent; and a double opt-in agreement involves a two-step process where users first take an initial action and then confirm agreement through a separate action, such as clicking a confirmation email link.

What makes an enforceable online arbitration clause?

There are several essential elements, including: conspicuous and prominent notice using contrasting colors and adequate font size; explicit reference to arbitration; unambiguous manifestation of assent through affirmative action; ensuring terms are accessible; documenting the process; maintaining temporal proximity between notice and consent; using plain language; and conducting regular audits and updates.

Background and Procedural History

The plaintiff filed suit against NexGen in August 2022, alleging the defendant violated the TCPA and FTSA by sending unsolicited telemarketing messages to his phone number, which was registered on the National Do Not Call Registry, without obtaining his prior express consent. The defense moved to compel arbitration, on the grounds that the plaintiff agreed to arbitrate all disputes when he purchased two products from NexGen's website.

The defendant argued that the plaintiff agreed to binding arbitration through three separate agreements:

1. Browsewrap Agreement: A browsewrap agreement is an online contract where a website purports to bind users to terms merely by their use of the site, typically through a hyperlinked reference to terms of service rather than requiring affirmative action or explicit consent.
   
2. Clickwrap Agreement: A clickwrap agreement is an online contract where users must affirmatively click a button or checkbox (typically labeled “I agree”) to proceed, thereby manifesting explicit consent to the displayed terms before completing a transaction.
   
3. Double Opt-in Agreement: A double opt-in agreement is a two-step consent process where a user first takes an initial action (such as clicking a button or entering an email address) and then confirms or reaffirms agreement to terms through a separate action (such as clicking a link in a confirmation email), thereby establishing heightened evidence of mutual assent.

The district court rejected all three theories and denied the motion to compel arbitration. NexGen appealed, and the Eleventh Circuit affirmed.

Why Each Theory Failed

The Browsewrap Theory: Insufficient Notice

To support its agreement that the plaintiff was bound under a browsewrap agreement, the defense relied on the presence of a "Terms of Use" hyperlink in the footer of the website in small, white font, which linked to terms that included the arbitration provision, appeared at the bottom of NexGen's webpage in small, white font.

The Eleventh Circuit held that this browsewrap arrangement failed because the website did not provide conspicuous notice of the terms. The court explained that NexGen's website was "long, cluttered, [and] visually distracting," making the hyperlink "hardly sufficient to provide reasonable notice of contractual obligations, including arbitration clauses." In other words, the link was not prominent or conspicuous enough to put a reasonable person on inquiry notice of the Terms of Use.

Moreover, the website failed to indicate that mere use of the site would constitute assent to the Terms of Use. The court’s rejection of the browsewrap argument is hardly surprising, as they consistently refuse to enforce browsewrap agreements unless the terms are conspicuously presented and the website clearly communicates that continued use manifests agreement. NexGen's implementation fell far short of this standard.

The Clickwrap Theory: No Clear Assent to Arbitration

To support its argument that the plaintiff was bound under a clickwrap agreement, it argued that when the plaintiff clicked the "Go To Step #2" button during checkout, he agreed to all website terms, including the arbitration provision. However, the court found this clickwrap theory fatally flawed.

The critical language next to the button stated: "By clicking the button above, you consent to receive from Nexgen emails, calls, and SMS text messages at any time, which could result in wireless charges, at the number provided above." The court emphasized that this language made clear that plaintiff was agreeing to receive communications, but the button language made no reference to arbitration, nor did it indicate that the plaintiff agreed to be bound by the website Terms of Use.

In essence, the checkout page simply failed to warn the plaintiff that by clicking the button, he was consenting to the arbitration provision under the Terms of Use. Thanks to that fatal flaw, the court could not find that he manifested assent to arbitrate his claims.

The Double Opt-In Theory: Insufficient Evidence

Finally, the defense argued that plaintiff agreed to arbitration under a double opt-in arrangement by confirming his email address after purchase, thereby agreeing to receive marketing messages through NexGen's "Messaging Program," which was governed by the Terms of Use, which included mandatory arbitration. The court rejected this theory as well, primarily due to NexGen's failure to produce the actual confirmation email or redirect page.

Without evidence showing what the email or confirmation page looked like, or that the plaintiff clicked on any link it may have included, the court was unable to conclude that the email included any reference to the arbitration provision or required plaintiff to confirm assent to the website Terms of Use.

The Financial Consequences of Failed Arbitration Clauses

The practical impact of the Valiente decision for the defendant cannot be overstated. TCPA class actions represent one of the most significant litigation risks for businesses engaged in marketing communications. Statutory damages of $500 to $1,500 per violation multiply rapidly across class members, frequently resulting in settlements or verdicts ranging into the millions of dollars.

For example, TCPA class action settlements have produced payouts as high as 182 times the actual harm from violating communications. When a business cannot compel arbitration with a class action waiver, it faces exposure not just for individual damages but for aggregate liability across potentially thousands of class members. The litigation costs alone—even before considering settlement or judgment amounts—can be devastating.

By contrast, an enforceable arbitration agreement with a class action waiver typically confines a defendant's exposure to individual claims, dramatically reducing both the financial stakes and the leverage plaintiffs' attorneys have to extract large settlements. The Valiente court's refusal to enforce the arbitration clause thus exposed the company to precisely the catastrophic class action liability that arbitration provisions are designed to prevent.

Essential Elements for Enforceable Online Arbitration Clauses

The Valiente decision, read alongside recent precedent from multiple circuits, establishes clear guidelines for businesses seeking to ensure their online arbitration clauses will withstand judicial scrutiny. The following elements are essential:

1. Conspicuous and Prominent Notice: The website must provide clear, conspicuous notice that users are agreeing to specific terms, including arbitration provisions. Courts evaluate conspicuousness by examining multiple factors, including font size, color contrast, spatial placement, and the visual clutter surrounding the disclosure.
   
   Best practices include using contrasting colors (such as red or blue hyperlinks against gray text), adequate font size, and placement that draws user attention. The notice should not be dwarfed by other page elements such as large, colorful buttons. Gray text in small font buried below action buttons (the de facto choice for many websites) will not suffice.
   
   In addition, the notice must appear on the first screen where a user takes action, as defects on an initial screen cannot be cured by subsequent screens. The disclosure should be positioned above or immediately adjacent to any action button, not hidden at the bottom of a cluttered page.
   
2. Explicit Reference to Arbitration: Generic references to "Terms of Use" or "Terms and Conditions" are insufficient if the arbitration provision itself is not specifically mentioned or adequately incorporated. The website should clearly communicate not just that terms exist, but that those terms include binding arbitration and class action waivers. Courts are particularly skeptical of attempts to bind consumers to arbitration when the actual arbitration clause is buried within lengthy terms accessible only through an easily missed hyperlink.
   
3. Unambiguous Manifestation of Assent: The user must take some affirmative action that clearly manifests agreement to the specific terms at issue. The language accompanying any action button must explicitly state what the user is agreeing to by clicking it. Effective formulations include phrases such as "By clicking [this button], you agree to our Terms of Use, which include a mandatory arbitration provision" or similar language that specifically references the binding terms. Vague or limited consent language will not be construed as assent to broader contractual terms like arbitration.
   
4. Choose the Right Agreement Type: Not all online agreement structures are created equal. Courts recognize several categories, each with different enforceability standards:
   
   Scrollwrap agreements require users to scroll through the terms before clicking "I agree" or undertaking some other affirmative action, have the highest enforceability rate. These agreements ensure users cannot proceed without acknowledging the terms.
   
   Sign-in wrap agreements notify users that creating an account or signing in constitutes agreement to terms accessible via hyperlink. These fall into a gray area, with enforceability depending heavily on the conspicuousness of the notice and clarity of the assent mechanism. Courts carefully scrutinize whether users had reasonable notice and clearly manifested assent.
   
   Browsewrap agreements that rely on passive assent through mere website use are the least enforceable and typically fail unless actual notice can be proven, a principle aptly illustrated by the Valiente decision.
   
5. Implement a Two-Step Consent Process: To maximize enforceability, businesses should consider implementing a two-step consent process: first, requiring users to check a box or click a button specifically acknowledging the terms; second, requiring a separate action to complete the transaction. This dual confirmation leaves no doubt that the user was aware of and agreed to the terms.
   
6. Context and Transaction Type Matter: Courts consider the context of the transaction when evaluating whether users should expect binding legal terms. While consumers may anticipate extensive terms when signing up for financial services or subscription services, they do not expect hidden legal agreements when making one-time retail purchases, much less when simply requesting a quote. This means that the same disclosure that suffices for a complex, ongoing relationship may be insufficient for a simple product purchase.
   
7. Ensure Terms Are Accessible: The hyperlinked terms must actually be accessible when the user clicks on them. Broken links or terms that are difficult to access can render the entire agreement unenforceable. Businesses should regularly test their hyperlinks and ensure that terms remain accessible throughout the user journey.
   
8. Document the Process: Companies should maintain clear records of how terms are displayed and when customers provide consent. Screenshots, UI version histories, and system logs can provide decisive evidence if enforceability is later challenged in litigation. This documentation serves as proof that users were presented with adequate notice and had the opportunity to review the terms.
   
9. Temporal Proximity: The notice of terms should appear in close temporal proximity to the user's action manifesting assent. Stated differently, there should be a clear connection between viewing the notice and taking the action that creates the binding agreement. Distant or temporally separated references to terms are less likely to establish that users knowingly assented.
   
10. Plain Language and Readability: Arbitration clauses should be drafted in clear, plain language that consumers can understand. Courts are more likely to enforce clear, accessible arbitration clauses than those written in impenetrable legalese. The clause should explain what arbitration means, what rights the consumer is giving up (such as the right to a jury trial or to participate in a class action), and how the arbitration process works.
    
11. Consider Opt-Out Provisions: While not required, including an opt-out provision allowing consumers to reject arbitration within a specified timeframe (typically 30 days) can enhance enforceability. Courts have viewed opt-out provisions favorably, finding them evidence that the arbitration clause is not unconscionable because consumers retain the ability to choose court litigation if they act promptly.
    
12. Regular Audits and Updates: Website terms and consent flows should be regularly audited to ensure they comply with evolving legal standards. The legal landscape for online contract formation continues to develop, and what passed muster five years ago may not be sufficient today. Companies should review and update their processes, particularly before undertaking high-volume marketing campaigns that could trigger TCPA or similar liability.

Practical Implications for Lead Generators and Marketers

The Valiente decision and the many others like it have clear implications for lead generation companies, online marketers, and any business collecting consumer information through web forms. These entities face particularly acute TCPA exposure because their business model involves collecting and transmitting consumer contact information, often resulting in marketing communications that can trigger liability.

Lead generators must recognize that arbitration agreements are not self-executing. Simply including a hyperlink to terms at the bottom of a form will not suffice. The consent flow must be carefully designed to provide clear notice, specific reference to arbitration, and unambiguous user assent.

Prudent companies should review their webforms and consent mechanisms to ensure compliance with the principles established in Valiente and similar cases. This includes examining button language, hyperlink placement and styling, the specificity of arbitration references, and the overall visual hierarchy of the page.

Companies should also consider moving away from browsewrap or weak sign-in wrap structures toward more robust clickwrap implementations that require affirmative, documented consent. While this may add an extra step to the user journey, the investment is minimal compared to the potentially ruinous financial consequences of TCPA class actions.

With damages that can reach into the millions of dollars, the effort required to implement these best practices represents a modest investment in risk management. Businesses that fail to heed the lessons of Valiente do so at their peril, risking exposure to the very class action litigation that arbitration agreements are designed to prevent.