April 17, 2014 -- Can companies limit your right to sue if you "like" them on Facebook or download a coupon from their website? A number of companies are including fine print in their terms of service that apply to some of the most "trivial" of consumer activities, potentially preventing a person from having their day in court.
General Mills changed its legal terms on its website, which now requires "all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration," excluding the option of a court trial or class action lawsuit.
Coffee company Starbucks has similar language in its gift card terms and conditions related to "binding arbitration."
Companies that have had "forced arbitration" provisions in their legal language include DirecTV, Verizon Wireless, Chase, AT&T and Wells Fargo.
Scott Nelson, an attorney with the nonprofit group Public Citizen, calls these types of provisions, "ubiquitous," and Public Citizen lists more on its website.
There are “numerous” other companies not included in the list that impose arbitration clauses and class action bans on consumers and employees in their contract terms, said Christine Hines, consumer and civil justice counsel at Public Citizen.
However, General Mills' new terms are "the broadest attempt" to attach terms of service to a website extending to all subsequent consumer transactions with a company, Nelson said. "Once someone does it, though, others are sure to follow," he said.
The cereal and snack manufacturer, whose goods are sold indirectly through grocers, is trying to cover its products by attaching an arbitration agreement to the use of its website for relatively trivial interactions, Nelson said, "making that agreement so broad as to cover claims based on the consumer’s subsequent purchases of its products."
In response to a New York Times story and other media articles describing General Mills' legal policy change, a statement from General Mills said, "This is being broadly mischaracterized. No one is precluded from suing us merely by purchasing our products at the store or liking one of our brand Facebook pages. That is just a mischaracterization."
"For example, should an individual subscribe to one of our publications or download coupons, these terms would apply. But even then, the policy would not and does not preclude a consumer from pursuing a claim. It merely determines a forum for pursuing a claim," the General Mills statement read. "And arbitration is a straightforward and efficient way to resolve such disputes."
Nelson said liking a brand on Facebook would not be enough to subject consumers to an enforceable contract to arbitrate a case, as opposed to filing a lawsuit, for example.
"A contract has to involve benefits running both ways," Nelson said. "To make a promise to arbitrate enforceable, it has to be part of a contract in which both sides are getting something." If a consumer just says she likes General Mills on Facebook, she has not received any benefit from General Mills in exchange that could create a binding contract, he adds.
Nevertheless, Nelson said General Mills' terms are "still incredibly broad" to try to assert that someone who just visits a website, or downloads a coupon, thereafter must arbitrate all claims arising out of any future purchases of their product.
Public Citizen is pursuing a lawsuit against another company for its terms of service that prevented customers from writing negative online reviews. Jen and John Palmer from Utah are suing KlearGear.com after it fined them $3,500 for writing a negative online review, sparking an alleged debt to credit reporting agencies.
Scott Michelman, another attorney with Public Citizen, has moved for a default judgment because KlearGear has failed to respond to the suit. That motion has been pending for about a month, awaiting a judge's approval, he said.