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April 21, 2014

It’s Not Just General Mills: Dozens of Major Companies Use Unfair Fine Print to Deny People Their Legal Rights

Statement of Christine Hines, Consumer and Civil Justice Counsel, Public Citizen

Facing a public uproar that showed no sign of abating, General Mills dropped the unfair fine print it posted online that would deprive customers who used its website of the right to sue to settle a dispute.

General Mills had added a forced arbitration clause and a ban on class actions to its “legal terms” on its website for the same purpose as most other corporations – unilaterally preventing its customers from filing lawsuits against it and escaping responsibility for causing injury.

So we can strike one off the list. But General Mills isn’t the only company to dupe its customers into “agreeing” to take any dispute to an arbitrator, rather than court.

Public Citizen’s Forced Arbitration Rogues Gallery catalogues some of the many corporations that use fine-print contracts to deprive consumers or employees, of their right to sue, forcing people instead to resolve disputes in individual, secret arbitration.

These companies include big-name corporations like: Verizon, AT&T, T Mobile, Starbucks, Discover, Comcast, Gold’s Gym, Sprint, Patagonia, Netflix, Amazon.com, Hulu, Dropbox, Wells Fargo, BB&T, PNC Bank, American Express, Dell, Sony, Lennar, KB Home, PayPal, Match.com, eBay, Neiman Marcus, Dillard’s, Orkin, CarMax and Papa John’s.

Forced arbitration, which denies the people their right to sue when harmed, is spreading like a poison through industries that provide products and services to consumers, and is increasingly being added to corporate contracts with employees.

The only way we can combat this is if We, the People, speak up. Lesson No. 1 from the General Mills fiasco for corporate lawyers and public relations spokespersons: Americans want to retain their legal rights, thank you very much.

When people have a chance to protest, companies are forced to reverse their policies.

As recently as last December, The New York Times uncovered the details of an arbitration clause in Hyundai’s owner manuals directing that consumers’ warranty disputes with the auto manufacturer be resolved in arbitration instead of court. Just hours after the article was posted, Hyundai announced that it would cancel its arbitration clause.

Last year, brokerage firm Charles Schwab was caught overstepping the bounds. The investor firm, which had long included an arbitration clause in its contracts with customers, decided that it would go even further by prohibiting its customers from participating in class actions against it.

The uproar included a Public Citizen petition, congressional reaction and calls for action to the federal oversight agency, the Securities and Exchange Commission (SEC), demanding that the agency ban arbitration clauses in brokerage firm and investment advisor contracts with their customers. Soon after, Charles Schwab relented. While it did not remove the arbitration clause from its customers’ contracts, it eliminated the class-action ban, at least for now.

Many other corporations have taken away our right to sue. The General Mills example shows that when consumers speak out to preserve their rights, individual companies may back down. But we can’t fight each of the tens of thousands of arbitration clauses individually, so we also need to fight to get our rights back by demanding an outright ban on these clauses in consumer contracts.

People should tell Congress, the SEC and the Consumer Financial Protection Bureau how they feel about corporations taking away their rights via unfair fine print.

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