Articles Posted in Forced Arbitration

forced-arbitrationGeneral Mills gave itself something of a Public Relations black eye when it got caught slipping some tricky new language into its “terms of service” agreement. Unnoticed by most consumers, the company had imposed restrictive new legal conditions on anyone who unsuspectingly redeemed an online coupon for a cereal or baking product, or clicked “Like” on a General Foods Facebook page, or entered a sweepstakes or otherwise received a “benefit” from the company (other than, for example, the thrill of watching one’s children savor their Count Chocula).

The updated language took away the consumer’s right to sue General Mills in court and required them to submit to submit any grievances against the company to an arbitrator. It also banned them from participating in class action suits. Because they were engaged in routine online activities, few General Mills customers understood that they were entering into a contract at all, much less renouncing their right to sue the company.

This misdeed generated a few days of media outrage, and due to a furious – if short-lived – backlash the company was persuaded to rescind the new terms. But in reality, General Mills’ only “crime” was getting caught. Although the media chose this particular incident to spend fifteen minutes on, there was nothing illegal or even unusual about inserting restrictive clauses into an online usage agreement. In fact, compelling consumers to surrender their right to legal redress in the courts – generally known as forced arbitration – is quickly becoming standard corporate practice.