On October 22, the U.S. District Court for the Middle District of North Carolina granted a motion to compel arbitration by an earned wage access provider. The underlying complaint alleged that the provider’s “lightning speed” fees and “tips” resulted in unlawfully high annual percentage rates and violated North Carolina’s Consumer Finance Act, Debt Collection Act, and Unfair and Deceptive Trade Practices Act. The court found that each of the three named plaintiffs had entered into valid online agreements containing arbitration provisions.

The court, applying California law, rejected the plaintiffs’ argument that the online agreements were invalid because the sign-up process provided inadequate notice, finding that both versions of the applicable terms containing the arbitration agreement gave “reasonably conspicuous notice of the terms” through a hyperlink during the sign-up flow. The court further held that users “unambiguously manifested their assent” to these online agreements by clicking “create account” and using the service. The court further rejected an argument raised by one of the plaintiffs that the terms applicable to her should be invalidated as unconscionable, holding that because the agreement allowed users to opt out of arbitration within 30 days, it was not unconscionable under California law.

The court granted the motion to compel arbitration and stayed the proceedings for one year, ordering the case to be dismissed without prejudice after one year if no party moved to continue or lift the stay within that time period.