California’s Second District Court of Appeal upheld a trial court’s refusal to compel arbitration after a retailer attempted to bind a customer through a single line of small, gray text placed beneath the order button. The court found the notice “difficult to read and far less prominent” than other elements on an already cluttered two-column checkout page. Without conspicuous notice or clear assent, the arbitration agreement failed.
In the case of Cruz v. Tapestry, Inc. No. B343637 (Cal. Ct. App. 2d Dist., Div. 1)., Leslie Cruz’s online shopping with Tapestry’s subsidiary websites looks like what millions of consumers do every day. In early 2024, she made a few purchases and later claimed the company’s pricing practices were misleading, a classic “fake sale” setup where products are almost never offered at the so-called “regular” price, making the discounts look bigger than they really are.
Cruz sued for unfair competition and false advertising. Tapestry responded by trying to push the case into arbitration, pointing to its website’s Terms of Use. The catch was that the only notice of those terms was a single line of small, gray text under the purchase button, stating that completing the order meant agreeing to the Terms of Use and Privacy Policy.
The trial court said that it was not good enough, and the Court of Appeal agreed with the trial court that Tapestry’s website failed to provide reasonably conspicuous notice of arbitration and required no affirmative assent, since there was no checkbox. The gray, small-font notice sat below a bright purchase button on a crowded, two-column checkout page, where other graphics and text easily distracted the consumer’s attention.
The courts framed the issue simply: Did Cruz receive reasonably sufficient notice that clicking “purchase” would bind her to arbitration? Their answer was no.
The decision highlighted three factors that businesses should note:
Visual Prominence: The arbitration notice was less noticeable than other page elements and failed to draw attention to its significance.
Transaction Context: While consumers may expect extensive terms when signing up for a subscription or financial service, they do not anticipate hidden legal agreements when making a one-time retail purchase.
Design Choices: The gray, small-font text suggested the notice was intentionally minimized rather than designed to ensure real consent.
Cases like Cruz highlight the recurring issues that decide whether arbitration succeeds or fails. They also point to clear steps businesses can take to structure dispute resolution in ways that are both enforceable and effective.
What Cruz Means for Arbitration. When consumers feel blindsided by a clause they never noticed, it breeds distrust and often triggers threshold fights over arbitrability. Instead of reaching the merits, parties end up litigating whether the case belongs in arbitration at all, precisely what happened in Cruz.
Consumers expect extensive legal terms when signing up for software, banking services, or other ongoing relationships. They do not expect them in a straightforward retail purchase. Courts are increasingly sensitive to these contextual differences.
Businesses sometimes worry that making arbitration clauses conspicuous will scare customers away. In practice, the opposite is true. Clear notice ensures that only consumers who knowingly agree end up in arbitration, which reduces challenges and helps preserve the efficiency that arbitration is meant to provide.
To reduce risk and strengthen enforceability, businesses should:
- Use contrasting colors, adequate font sizes, and prominent placement. If promotions, payment fields, or graphics are more eye-catching than your terms notice, courts may find your arbitration clause unenforceable.
- Present your terms at a point in the transaction when customers have a genuine opportunity to review them. Burying the notice at the very end of a rushed checkout flow increases risk.
- Align the way you present arbitration clauses with the type of transaction. Consumers anticipate detailed terms for software or banking services, but not when buying a handbag or other retail item. Courts are paying attention to these contextual differences.
- As commerce becomes increasingly digital, courts will continue to test how traditional contract principles apply to new technologies and business models. Cruz makes clear that California courts will insist on meaningful notice and genuine consent for arbitration agreements, no matter the platform or medium.
For businesses, this means investing in clear, transparent communication about dispute resolution terms and presenting them in ways customers can reasonably notice. For consumers, it reinforces that arbitration agreements cannot be hidden in fine print.
Cruz is not anti-arbitration; it is pro-consent. By requiring businesses to provide conspicuous notice, the court helps ensure arbitration serves its intended purpose: delivering an efficient, fair alternative to litigation for parties who knowingly choose it.
Businesses should be reviewing their checkout flows and online consent mechanisms now, before a court, as in Cruz, tells them their arbitration agreements will not hold up.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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