Federal rulings clarify enforceability of streaming and online service contracts

The legal threshold for binding users to arbitration and privacy terms has shifted from the mere existence of a link to the specific aesthetics of the UI. For streaming platforms, this means design choices intended to reduce friction—such as burying terms in footer text—now represent significant litigation risks, particularly under the Video Privacy Protection Act (VPPA). As courts increasingly scrutinize mobile-first layouts and 'sign-in wrap' flows, engineering and legal teams must collaborate to ensure terms are visually unavoidable. Watch for a potential Supreme Court review to resolve the circuit split between the Sixth and Eleventh Circuits regarding what constitutes 'reasonably conspicuous' digital notice.

The recent rulings in Tejon and Dahdah come amid a period of intense regulatory and judicial focus on digital subscription models. In October 2024, the Federal Trade Commission (FTC) announced its final 'Click-to-Cancel' rule under the Negative Option Rule framework, which sought to mandate that canceling a subscription be as simple as signing up. However, as reported by Inside Investigator in July 2026, the Eighth Circuit Court of Appeals struck down the federal rule on procedural grounds, arguing the FTC failed to perform a required economic impact analysis. Despite this setback at the federal level, the FTC launched an Advance Notice of Proposed Rulemaking (ANPRM) in March 2026 to revive the regulation, per Jones Day reporting.

Simultaneously, streaming services face a surge in litigation under the 1988 Video Privacy Protection Act (VPPA). These class actions typically allege that platforms share user viewing data with third-party trackers, such as the Meta Pixel, without informed consent. As noted by WilmerHale in early 2025, the VPPA has shifted from a 'dinosaur statute' to a primary tool for privacy plaintiffs. The Supreme Court has already moved to address the resulting legal fragmentation; per Smith Porter in February 2026, the Court agreed to hear Salazar v. Paramount Global to resolve a circuit split over who qualifies as a 'consumer' under the act. This decision, expected in the 2026 term, will determine whether a subscription must specifically be for audiovisual content to trigger VPPA protections.