Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-01371/USCOURTS-ca7-15-01371-0/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 15-1371

GARY W. SGOUROS, on behalf of himself and all others similarly situated,

Plaintiff-Appellee,

v.

TRANSUNION CORPORATION, TRANS UNION LLC, and

TRANSUNION INTERACTIVE, INC.,

Defendants-Appellants.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 14 C 1850 — James B. Zagel, Judge.

____________________

ARGUED SEPTEMBER 29, 2015 — DECIDED MARCH 25, 2016

____________________

Before WOOD, Chief Judge, and EASTERBROOK and RIPPLE,

Circuit Judges.

WOOD, Chief Judge. Hoping to learn about his creditworthiness, Gary Sgouros purchased a “credit score” package 

from the defendant, TransUnion. Armed with the number 

TransUnion gave him, he went to a car dealership and tried 

to use it to negotiate a favorable loan. It turned out, however, 

Case: 15-1371 Document: 42 Filed: 03/25/2016 Pages: 13
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that the score he had bought was useless: it was 100 points 

higher than the score pulled by the dealership. Believing that 

he had been duped into paying money for a worthless number, Sgouros filed this lawsuit against TransUnion. In it, he 

asserts that the defendant violated various state and federal 

consumer protection laws. Rather than responding on the 

merits, however, TransUnion countered with a motion to 

compel arbitration. It asserted that the website through 

which Sgouros purchased his product included (if one 

searched long enough) an agreement to arbitrate all disputes 

relating to the deal. The district court concluded that no such 

contract had been formed and denied TransUnion’s motion. 

TransUnion has appealed from that decision, but we agree 

with the district court and affirm its order. 

I

On June 10, 2013, Sgouros purchased TransUnion’s “3-in1 Credit Reports, Credit Scores & Debt Analysis” for $39.90; 

he did so using TransUnion’s website. In order to complete

the purchase, Sgouros had to take three steps. First, he 

clicked on a large orange “Click Here” button on the 

homepage under the heading “Get Your Credit Score & Report.” This click took him to a page headed with the message 

“Your FREE credit score & $1 credit report are only moments 

away.” Here is what it looked like:

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No. 15-1371 3

As the screenshot shows, the customer was told that he 

had to take three steps in order to obtain his “FREE credit 

score & $1 credit report.” Step 1, pictured above, required 

Sgouros to furnish some identifying information and select 

“Yes” or “No” in response to a prompt that said “Please 

Case: 15-1371 Document: 42 Filed: 03/25/2016 Pages: 13
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send me helpful tips & news about my service, including 

special offers from TransUnion and trusted partners!” Sgouros answered these questions and clicked the large orange 

button labeled “Submit & Continue to Step 2.” Step 2 is reproduced below:

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No. 15-1371 5

It requires the customer to create an account user name and 

password and to type in his credit card information. It also 

asks “Is your home address the same as your billing address?” and offers “Yes” and “No” bubbles. Below these 

bubbles one can see a rectangular scroll window. 

Inside the scroll window the words “Service Agreement” 

appear at the top. They are followed by two fully visible 

lines and a third that is chopped off horizontally but is legible enough to read. Including that third line, the visible text 

says “Welcome to the TransUnion interactive web site, 

membership tui.transunion.com (the “Site”). This Service 

Agreement (“Agreement”) contains the terms and conditions 

upon which you (“you” or “the member”) may access and 

use ... .” (The version of the Service Agreement presented in 

TransUnion’s brief includes the full third line, and it underlines the words “Service Agreement” and “the terms and 

conditions” in the visible text, even though there is no such 

underlining in the attached web page exhibit. These discrepancies, while troubling, do not affect our analysis.) Underneath the scroll box and to the right are the small hyperlinked words “Printable Version.” Below those words was 

this paragraph, in bold text: 

You understand that by clicking on the “I Accept & Continue to Step 3” button below, you 

are providing “written instructions” to 

TransUnion Interactive, Inc. authorizing 

TransUnion Interactive, Inc. to obtain information from your personal credit profile from 

Experian, Equifax and/or TransUnion. You authorize TransUnion Interactive, Inc. to obtain 

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such information solely to confirm your identity and display your credit data to you.

Sgouros proceeded to Step 3 by clicking on the “I Accept 

& Continue to Step 3” button. Nowhere did this button require him first to click on the scroll box or to scroll down to 

view its complete contents, nor did it in any other way call 

his attention to any arbitration agreement. But, buried at 

page 8 of the full, 10-page printable version of the Service 

Agreement there was a purported arbitration agreement. In 

addition, the first page of the Agreement contains a brief 

statement indicating that it includes an arbitration clause 

and class action waiver.

Sgouros filed a putative class action suit against 

TransUnion under the Fair Credit Reporting Act, 15 U.S.C. 

§ 1681g(f)(7)(A); the Illinois Consumer Fraud and Deceptive 

Business Practices Act, 815 ILCS 505/1 et seq.; and the Missouri Merchandising Practices Act, MO. REV. STAT. § 407.010 

et seq., for misleading consumers by failing to inform them 

that the formula used to calculate their purchased credit 

scores was materially different from the formula used by 

lenders. We have jurisdiction to review the district court’s 

denial of the motion to compel arbitration pursuant to the 

Federal Arbitration Act, 9 U.S.C. § 16(a)(1)(B). 

II

Our review of the issues on this appeal—the question 

whether an agreement to arbitrate arose, and the denial of 

TransUnion’s motion to compel arbitration—is de novo. Janiga 

v. Questar Capital Corp., 615 F.3d 735, 742 (7th Cir. 2010) (contract formation); Int'l Bhd. of Elec. Workers Local 2150 v. NexCase: 15-1371 Document: 42 Filed: 03/25/2016 Pages: 13
No. 15-1371 7

tEra Energy Point Beach, LLC, 762 F.3d 592, 593-94 (7th Cir. 

2014) (arbitrability). The relevant facts are not disputed.

A

As the Supreme Court repeatedly has emphasized, arbitration is a creature of contract. E.g., AT&T Mobility LLC v. 

Concepcion, 563 U.S. 333, 339 (2011); Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp., 559 U.S. 662, 684 (2010). We thus turn first 

to the question whether an agreement to arbitrate arose between TransUnion and Sgouros. TransUnion’s primary support for the alleged agreement relies on Sgouros’s act of 

clicking on the button that said “I Accept & Continue to Step 

3.” Courts around the country have recognized that this type 

of electronic “click” can suffice to signify the acceptance of a 

contract. See, e.g., Specht v. Netscape Commc'ns Corp., 306 F.3d 

17, 23 (2d Cir. 2002) (applying California contract law and 

finding plaintiffs had not assented to arbitration clause in a 

license agreement located below the download button on a 

website offering free software). There is nothing automatically offensive about such agreements, as long as the layout 

and language of the site give the user reasonable notice that 

a click will manifest assent to an agreement. Hancock v. Am. 

Tel. & Tel. Co., 701 F.3d 1248, 1257 (10th Cir. 2012) (finding 

that Florida and Oklahoma law would uphold the validity of 

acceptance using a click where customers could review the 

service terms in a scroll box and could not complete purchase without clicking “I Agree”); Feldman v. Google, Inc., 513 

F. Supp. 2d 229, 236–37 (E.D. Pa. 2007) (finding a “click” 

agreement valid under California law because the user 

agreement was “immediately visible,” contained a “prominent admonition in boldface to read the terms and conditions carefully, and with instruction to indicate assent if the 

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user agreed to the terms,” and required the “affirmative action” of clicking “Yes”); Jallali v. Nat'l Bd. of Osteopathic Med. 

Examiners, Inc., 908 N.E.2d 1168, 1173 (Ind. Ct. App. 2009)

(finding valid agreement for purposes of Indiana law where

user had to click “Accept” under a box containing an 

“Acknowledgement and Agreement”). 

1

The present case, the parties agree, is governed by Illinois 

law. In Illinois, as in many states, the law governing the formation of contracts on the Internet is still in the early stages 

of development. But there is no reason to think that Illinois’s 

general contract principles do not apply. Formation of a contract requires mutual assent in virtually all jurisdictions; Illinois courts use an objective approach to that question. See, 

e.g., Beverly v. Abbott Labs., No. 15-1098, sl. op. at 6 (7th Cir. 

Mar. 16, 2016); Vill. of S. Elgin v. Waste Mgmt. of Ill., Inc., 810 

N.E.2d 658, 670 (Ill. Ct. App. 2004) (“’Intent’ refers to objective manifestations of intent in the words of the contract and 

the actions of the parties; it does not encompass one party’s 

secret, undisclosed intentions or purely subjective understandings of which the other party is unaware.”). Under the 

objective theory, intent to manifest assent in Illinois is revealed by “outward expressions such as words and acts.” 

Bank Computer Network Corp. v. Cont'l Ill. Nat. Bank & Trust 

Co. of Chicago, 442 N.E.2d 586, 591 (Ill. Ct. App. 1982). The 

parties do not need to “share the same subjective understanding as to the terms of the contract.” Midland Hotel Corp. 

v. Reuben H. Donnelley Corp., 515 N.E.2d 61, 65 (Ill. 1987). But 

“there must be a meeting of the minds or mutual assent as to 

the terms of the contract.” Id. 

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Generally, a party who signs a written contract is presumed to have notice of all of the contract’s terms. Janiga, 615 

F.3d at 743. The trick here is to know how to apply these 

general principles to newer forms of contracting. In the context of cruise-ship tickets, which present problems similar to 

those of agreements formed on the Internet, Illinois courts 

have applied a “two-part ‘reasonable communicativeness’

test,” under which they ask “(1) whether the physical characteristics of the ticket reasonably communicate the existence 

of the terms and conditions at issue” and “(2) whether the 

circumstances surrounding the passenger’s purchase and 

subsequent retention of the tickets permitted the passenger 

to become meaningfully informed of its contractual terms.” 

Walker v. Carnival Cruise Lines, Inc., 889 N.E.2d 687, 694 (Ill. 

Ct. App. 2008). Translated to the Internet, we might ask 

whether the web pages presented to the consumer adequately communicate all the terms and conditions of the agreement, and whether the circumstances support the assumption that the purchaser receives reasonable notice of those 

terms. This is a fact-intensive inquiry: we cannot presume 

that a person who clicks on a box that appears on a computer screen has notice of all contents not only of that page but 

of other content that requires further action (scrolling, following a link, etc.) Indeed, a person using the Internet may 

not realize that she is agreeing to a contract at all, whereas a 

reasonable person signing a physical contract will rarely be 

unaware of that fact. We need, therefore, to look more closely at both the law and the facts to see if a reasonable person 

in Sgouros’s shoes would have realized that he was assenting 

to the Service Agreement when he clicked “I Accept & Continue to Step 3.”

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The closest Illinois case on point is Hubbert v. Dell Corp., 

835 N.E.2d 113 (Ill. Ct. App. 2005). The court there found 

that an online purchaser of a computer agreed to the seller’s 

terms of service, which included an arbitration clause, when 

he completed the transaction. All five pages required to 

complete the purchase contained a visible hyperlink labeled 

“Terms and Conditions of Sale.” Id. at 122. Additionally, the 

online forms stated, “All sales are subject to Dell’s Term[s] 

and Conditions of Sale.” The court considered the hyperlinked pages to be the same as pages in a physical contract. 

Id. It concluded that the statement indicating that sales were 

subject to the terms, combined with the hyperlinks, was sufficient to “place a reasonable person on notice that there 

were terms and conditions attached to the purchase and that 

it would be wise to find out what the terms and conditions 

were before making a purchase.” Id.

What is notable about Hubbert, however, is how it differs 

from the present case. In Hubbert, Dell ensured that the purchaser would see the critical language before signifying her 

agreement. TransUnion did not. Indeed, the web pages on 

which Sgouros completed his purchase contained no clear 

statement that his purchase was subject to any terms and 

conditions of sale. The scroll box contained the visible words 

“Service Agreement” but said nothing about what the 

agreement regulated. The hyperlinked version of the Service 

Agreement was not labeled “Terms of Use” or “Purchase” or 

“Service Agreement,” but rather just “Printable Version.” 

And even indulging in the assumption that all visitors to this 

website are capable of reading the half-line of text, the visible words “This Service Agreement ... contains the terms 

and ... conditions upon which you ... may access and use 

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No. 15-1371 11

... ” fall short of providing notice that the purchase of a consumer credit score is subject to the agreement. 

But what cinches the case for Sgouros is the fact that 

TransUnion’s site actively misleads the customer. The block 

of bold text below the scroll box told the user that clicking 

on the box constituted his authorization for TransUnion to 

obtain his personal information. It says nothing about contractual terms. No reasonable person would think that hidden within that disclosure was also the message that the 

same click constituted acceptance of the Service Agreement.

Where the terms are not displayed but must be brought 

up by using a hyperlink, courts outside of Illinois have 

looked for a clear prompt directing the user to read them. 

Tompkins v. 23andMe, Inc., 2014 WL 2903752 (N.D. Cal. June 

25, 2014) (California law); Major v. McCallister, 302 S.W.3d 

227, 230 (Mo. Ct. App. 2009) (Missouri law); Feldman, 513 F. 

Supp. 2d at 236–37 (California law). One of Illinois’s sister 

courts came to the sensible conclusion that where a website 

specifically states that clicking means one thing, that click 

does not bind users to something else. See Lee v. Intelius Inc., 

737 F.3d 1254 (9th Cir. 2013) (finding no contract formed 

pursuant to Washington law to purchase monthly “family 

safety report” from third party where plaintiff believed he 

was purchasing only a background check and report and final button read “YES And show my report”). No court has 

suggested that the presence of a scrollable window containing buried terms and conditions of purchase or use is, in itself, sufficient for the creation of a binding contract, and we 

have no reason to think that Illinois would be the first.

TransUnion undid whatever notice it might have been 

furnishing in its bold text block by explicitly stating that a 

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click on the button constituted assent for TransUnion to obtain access to the purchaser’s personal information. That text 

distracted the purchaser from the Service Agreement by informing him that clicking served a particular purpose unrelated to the Agreement. 

B

TransUnion has one back-up argument: it contends that 

even if Sgouros’s clicking the “I Accept” button did not create a contract, his use of the site and the fact of purchase 

amounted to acceptance of the Service Agreement by conduct. In so arguing, TransUnion relies on Hubbert, as well as 

this Court’s decisions in Treiber & Straub, Inc. v. U.P.S., Inc.,

474 F.3d 379 (7th Cir. 2007), and Boomer v. AT&T Corp., 309 

F.3d 404 (7th Cir. 2002). In Treiber, we found that the plaintiff 

was bound by a limitation of liability term where he had to 

agree twice to abide by the terms and conditions on UPS’s 

website in order to ship his package. In Boomer, we found 

that a customer’s continued use of AT&T’s phone service 

constituted acceptance of new service terms that had been 

mailed to him in an envelope, the outside of which read: 

“ATTENTION: Important information concerning your 

AT&T service enclosed.” The letter clearly stated that continued use would mean acceptance of the new terms. 

Treiber and Boomer, however, do not help TransUnion either. The credit score purchase site did not contain any requirement that Sgouros agree to abide by any terms and 

conditions, nor did it warn the user that by completing a 

purchase he would be bound by the terms. The text stating 

that a purchase was conditioned on accepting the Service 

Agreement fell below what was visible on the site. TransUnion cannot manufacture notice where there was none. 

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No. 15-1371 13

III

Illinois contract law requires that a website provide a user reasonable notice that his use of the site or click on a button constitutes assent to an agreement. This is not hard to 

accomplish, as the enormous volume of commerce on the 

Internet attests. A website might be able to bind users to a 

service agreement by placing the agreement, or a scroll box 

containing the agreement, or a clearly labeled hyperlink to 

the agreement, next to an “I Accept” button that unambiguously pertains to that agreement. There are undoubtedly 

other ways as well to accomplish the goal. Somehow or other, however, TransUnion needed to get the message through 

to the site user that purchasing a consumer credit score 

means agreeing to the Service Agreement. It failed to do so 

in this case, and so we agree with the district court that no 

agreement that included an arbitration clause arose between 

TransUnion and Sgouros. We therefore AFFIRM the order of 

the district court denying TransUnion’s motion to send this 

case to arbitration and return the case to the district court for 

further proceedings. 

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