In upholding an arbitration agreement entered into during an online transaction, a federal district court in Illinois cited the availability of telephonic hearings in rejecting the claimant's argument that travel to the designated venue would be cost-prohibitive. The Court also rejected the claimant's argument that the agreement's class waiver rendered it unenforceable.

In Deaton v. Overstock.com, Inc., No. 07-cv-643-JPG, 2007 WL 4569874 (S.D. Ill. Dec. 27, 2007), Deaton made a purchase from Overstock.com (Overstock), an online retailer of brand name merchandise. During the transaction, Overstock verified Deaton's credit card information using the last four digits of the card number and the expiration date.

Deaton later sued Overstock, alleging that the verification procedure violated the Fair Credit Reporting Act. Overstock moved to compel arbitration pursuant to the terms and conditions of the website. In opposing the motion, Deaton argued that (1) arbitration was cost-prohibitive and (2) the arbitration agreement was unconscionable because it contained a class waiver (i.e., barred class-wide proceedings).

On the issue of costs, Deaton argued that traveling to Salt Lake City, the venue named in the arbitration agreement, would be too costly to pursue a statutory claim for $1,000 or less. In rejecting this argument, the Court explained that Deaton produced no evidentiary foundation for her alleged travel expenses and, more importantly, offered no evidence of her inability to pay. Moreover, as the Court noted, Deaton could request a telephonic hearing and thereby avoid any travel expenses.

The Court also rejected Deaton's argument that the class wavier rendered the arbitration agreement unenforceable because, as the Court noted, "the Seventh Circuit has never held that class actions bars in arbitration agreements are unconscionable." Accordingly, the Court issued an order compelling arbitration.