Tag: Consumer Contracts

  • Disclosure Debates (. . . same old, same old)

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    Amy Schmitz

    We talk about disclosures, and the importance of reading our consumer contract terms before committing to any deal. However, does anyone really care about contracts? Let’s face it: Contracts have become largely meaningless until we run into problems and want to use the “terms” for ammunition to get a remedy. I am a Contracts Professor and often bypass e-contract terms when I am in a hurry or know that I could never get the terms changed. We are all lazy in reading contracts. I have confirmed this in my own research, which I wrote about in Pizza-Box Contracts: True Tales of Consumer Contracting Culture, published in the Wake Forest Law Review.  Disclosure debates are not new.

    At the same time, texting and tweets as forms of disclosure have augmented shrouding and other tactics for effectivley hiding terms and contract modifications. The Federal Trade Commission hosted a one-day public workshop on Wednesday, May 30, 2012 to consider the need for new guidance concerning advertising and privacy disclosures in online and mobile environments. The workshop focused especially on challenges of making disclosures clear and conspicuous in social media and mobile marketing.

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  • Needle in a Haystack?

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    Amy Schmitz

    Following my post regarding PayPal's new opt-out arbitration provision, I talked to many individuals who could not find the directions for how they can opt out (hence "needle in a haystack").  Here they are:

    "Opt-Out Procedure.

    You can choose to reject this Agreement to Arbitrate ("opt out") by mailing us a written opt-out notice ("Opt-Out Notice"). For new PayPal users, the Opt-Out Notice must be postmarked no later than 30 Days after the date you accept the User Agreement for the first time. If you are already a current PayPal user and previously accepted the User Agreement prior to the introduction of this Agreement to Arbitrate, the Opt-Out Notice must be postmarked no later than December 1, 2012. You must mail the Opt-Out Notice to PayPal, Inc., Attn: Litigation Department, 2211 North First Street, San Jose, CA 95131.

    The Opt-Out Notice must state that you do not agree to this Agreement to Arbitrate and must include your name, address, phone number, and the email address(es) used to log in to the PayPal account(s) to which the opt-out applies. You must sign the Opt-Out Notice for it to be effective. This procedure is the only way you can opt out of the Agreement to Arbitrate."

    It seems PayPal is banking on our inertia.  How likely are we to send a letter in the mail to opt-out when PayPal is used for e-contracts?  Why not simply have an online opt-out procedure, as companies do for unsubscribing to online newsletters?  

    That said, PayPal's arbitration procedure is arguably reasonable on its face.  

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  • PayPal Joined the Party

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    Amy Schmitz

    Adam Levitin commented on the eBay's opt-out arbitration program on CreditSlips.org a few weeks ago, and there have been campaigns calling for consumers to opt out of eBay's program.  Public Citizen has provided instructions on its website for consumers "to protect their constitutional rights by opting out of a forced arbitration clause and ban on consumers joining together in class actions."  eBay is not alone in using this sort of opt-out arbitration program.  Many tech companies have joined, or plan to join, the "party" in requiring consumers to opt out or be subject to binding arbitration.

    Opt-out programs also may be layered now that PayPal is joining the party.  It recently sent notices to its users of policy updates, effective November 1, 2012, stating:

    "You will, with limited exception, be required to
    submit claims you have against PayPal to binding and final arbitration, unless
    you opt out of the Agreement to Arbitrate (Section 14.3) by December 1, 2012. Unless
    you opt out: (1) you will only be permitted to pursue claims against PayPal on
    an individual basis, not as a plaintiff or class member in any class or
    representative action or proceeding and (2) you will only be permitted to seek
    relief (including monetary, injunctive, and declaratory relief) on an
    individual basis."

    Query whether campiagns will begin for consumers to opt out of this program?  It also will be interesting to see how these opt-outs work in tandem due to PayPal's prominence as the purchasing mechanism for sites like eBay?  

  • When Squeaky Wheels Get Rusty

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    Amy Schmitz

    Yesterday, I wrote about the "squeaky wheel system," or "SWS" for ease of reference, which I explored in my article, Access to Consumer Remedies in the Squeaky Wheel System.  The research shows that consumers who have and take the time and resources to complain (or “squeak”) often get what they want. For example, consumers with the time and patience to endure the labrynth of their phone company's customer assistance line and actually speak with a representative regarding an increase in their bill are much more likely to get "loyalty" and other such discounts.  

    That said, I have noticed that companies are even becoming more stingy in providing assistance to proactive consumers. For example, a manufacturer recently insisted on charging me for shipping to send me a replacement for a blender that was under warranty.  Sure, the warranty covered replacement . . . but  not shipping (a la "fine print").  The warranty was therefore meaningless since the blender was worth about the same as the shipping cost, and it would be silly to expend resources to sue using UCC Article 2 or other warranty arguments.  Furthermore, I have been unable lately to catch many breaks on increased fees for phone and internet service, and had difficulty in obtaining any assistance from some credit card companies when trying to rectify the issues I faced when my purse and all my credit cards recently were stolen.

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  • Winners and Losers in the Squeaky Wheel System

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    Amy Schmitz

    First, I want to thank you for the invitation!  

    Most have heard the adage: “The squeaky wheel gets the grease.” We have long known that the “squeaky wheels” who are proactive in pursuing their needs and complaints are most likely to get what they want. That is proper for the most part to the extent that it rewards those who expend the time and resources to pursue their interests. However, this “squeaky wheel system,” or “SWS” for ease of reference, allows businesses to bank on our inertia (laziness) in contracting and ration remedies to only those with the most resources and power. This also may allow businesses to control public information by quieting the squeaky wheel consumers. The SWS can effectively prevent economists’ proposed “informed minority” from policing fairness of contract terms and business practices by alerting the majority about purchase concerns and prompting companies to make contract changes.

    This SWS has troubled me, leading to my recent article, Access to Consumer Remedies in the Squeaky Wheel System in volume 39 of the Pepperdine Law Review. This Article uncovers the salience of the SWS and explores its impacts on contract regulation and purchase practices in the consumer marketplace. It also provides a snapshot of empirical data from my own e-survey of Colorado consumers that is relevant to SWS dynamics. The article proposes proportional and efficient means for consumers to access purchase information and contract remedies using online and other low-cost remedy mechanisms. This proposal is by no means the “answer” and I invite other ideas for expanded and equalized remedy mechanisms to help diffuse the SWS,narrow the divide between the consumer “haves” and “have-nots,” and foster better fairness regulation of companies’ contract and claims assistance practices.

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