Commentary |

You’re giving away your rights in those online contracts you don’t read | GUEST COMMENTARY

Perhaps the most consequential documents ever produced in this country are the Constitution and the Declaration of Independence. The Constitution identifies our most important rights, while the Declaration explains why the deprivation of those rights justified the fight for independence. So you might be surprised to learn that rights the founding generation fought for have been stripped away from tens of millions of Americans — almost certainly including you — by businesses we deal with every day. And, unlike the British, these businesses have done so in a way that almost no Americans can even recognize until it is too late.

 Businesses have accomplished this by inserting incomprehensible terms in fine print contracts they know consumers do not read. The businesses argue that consumers are bound by these terms, which might as well be written in a foreign language they’re so incomprehensible. And our courts have largely allowed companies to get away with this — even though U.S. Supreme Court Chief Justice John Roberts himself acknowledges that he doesn’t always read terms and conditions before accepting them.

 What rights are we talking about? Well, for starters, you lose the right to file your case in court, you lose the constitutional right to a jury trial, you lose the right to appeal wrong decisions. 

 Instead, businesses get unwitting consumers to “agree” that if the consumer has a problem with the company, the consumer must try to resolve that problem before a private arbitration company that the corporation itself has chosen, according to rules the business has chosen. It is no wonder that, as even industry lawyers concede, almost no consumers bother to bring arbitration claims. And that means companies can violate consumer protection laws, and there’s not much consumers can do about it.

 Some industry lawyers have argued that it’s not the business’s fault if consumers don’t read contracts and that consumers shouldn’t be rewarded for laziness. But we think businesses shouldn’t be rewarded for writing lengthy, unintelligible contracts that would require consumers to spend hours to read and decode. Consumers and the Chief Justice are not alone here, as many consumer financial services lawyers, including the lawyer who invented the arbitration strategy, Alan Kaplinsky, say they don’t read contracts either.

 Even if consumers do wade through these seemingly endless contracts, it wouldn’t do them any good. That’s because the average consumer cannot make sense of the clauses ripping away their rights. A study earlier this year found that only five consumers out of 946 — half of one percent — understood what rights they were giving up by entering into an ordinary contract to open a bank account. Similarly, a 2015 study one of us co-authored reported that only two respondents out of 663, or less than 1%, understood the clause taking away consumer rights in a credit card agreement. Consumers who participated in both studies overwhelmingly reported that they believed they had never agreed to the clauses giving up their rights, even though the studies showed they had done just that. And a 2015 Consumer Financial Protection Bureau (CFPB) study confirmed that consumers just don’t understand these complex legal terms. In contrast, no study has ever found that consumers do understand these provisions.

 This practice is harmful to consumers and abusive. But don’t take our word for it. Congress itself has proclaimed that it is abusive for consumer financial services companies – such as big banks, credit bureaus, debt collectors and student and payday loan lenders – to take unreasonable advantage of consumers’ lack of understanding. And it is hard to think of something that exploits consumers more than stripping away constitutional and other fundamental rights without their even realizing it. 

 What should be done? The CFPB has the power to outlaw the use of these unfair clauses in some consumer contracts. Recently, consumer protection groups petitioned the CFPB to do just that. We, and 160 other law professors, think the bureau should act to protect consumers from these fine print traps. Ironically, if the bureau does so, businesses will no doubt bring legal challenges to the bureau’s action — in the very same courts that they block consumers from accessing.

 Our founding generation fought to protect their rights and the rights of their descendants. Our generation should block companies from using tricks to trap Americans into giving up those same rights without even knowing they are doing so.

 Jeff Sovern (jsovern@law.umaryland.edu), Myriam Gilles (gilles@yu.edu), Prentiss Cox (coxxx211@umn.edu) and David Vladeck (David.Vladeck@law.georgetown.edu) are law professors at, respectively, the University of Maryland Francis King Carey School of Law, Benjamin N. Cardozo School of Law, University of Minnesota Law School and Georgetown University Law Center.