Boilerplate Symposium II: Theresa Amato on Remedies to the Problems Posed by Boilerplate

This is the second in a series of posts reviewing Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.

Theresa Amato, a public interest lawyer, is the executive director of Citizen Works, and the director of the Fair Contracts Project (faircontracts.org).

Professor Radin’s masterpiece Boilerplate sets forth the intellectual underpinnings for an energetic movement to correct the imbalance of power between corporations and consumers in fine print contracts.  Her explanations of the degradation of consent and the resulting diminishment of the rule of law should incite all those who read it to not merely nod in accord, but to take action.   

Radin calls for a new legal way to analyze the boilerplate that she painstakingly shows fails to merit the term “contract” —and therefore should not be evaluated under contract law.  Instead, she suggests we evaluate these mice-print monstrosities as a product itself that can cause harm.  The boilerplate should be considered a potential inflictor of consumer harm through massive “rights deletion,” or “rights strip mining,” as Ralph Nader says, and thus should be addressed in tort, or under a new legal rubric altogether.  This bold suggestion alone elevates the book to compulsory reading as most academic articles tend only to set forth descriptions and analyses of the epic failure of the disclosure regulatory paradigm, but then fall short on solutions and action. 

In both academia and consumer advocacy, far too few people are focused on solving the problem—to create remedies beyond studying the problem or treating its symptoms in a legal aid, case-by-case manner.  Though there may be disagreement on the exact contours or how to solve the problems of boilerplate, there does seem to be some movement in recognition, at least, that there is a problem in need of solution.  

A survey of the academia and advocacy landscape reveals:

• The fine print qua fine print has grown longer and mutates more frequently, as NYU School of Law Professor Florencia Marotta-Wurgler has documented, for example, with on-line contracts;

• Businesses are not self-policing on boilerplate, or making market corrections for the consumer’s benefit.  To the contrary, recent Supreme Court decisions have spurred rights-reducing action, by sanctioning, for example, mandatory arbitration and class action waivers;

• Consumer abuses in fine print will not be solved with financial literacy courses and by blaming consumers for not reading unilaterally-imposed contracts, which they cannot understand if they do, and then don’t necessarily use to make decisions, as Loyola Law School Los Angeles Professor Lauren Willis and others have ably documented;

• Despite decades of computer use, inadequate corporate transparency regulation means that in many industries terms of service are still not online; it is often difficult to obtain copies of the contracts—until after becoming a customer for the underlying product or service.   This has the additional potential to skew academic research to on line industries, and not necessarily where some of the gravest rights-reducing behavior may exist, e.g., in harder-to-obtain nursing home or employment contracts.

• The judiciary applies antiquated tenets of contract law—in a legal fiction—that upholds abusive provisions in a case-by-case unconscionability analysis, primarily enforcing them by continuing to place the outdated “duty to read” on consumers, including those who patently cannot.  Consumers face a curtailed potential for redress, especially when coupled with disappearing class action potential. 

• Federal and state agencies to date have not allocated significant resources for a much needed focus on the corporate fine print—not even at the bully pulpit level—nor have they posited suitable alternatives.   

• Instead of Congress doling out more regulatory authority to agencies (as they did with the CFPB and the SEC and as they should to help fix this), for example, members continue to contest the CFPB, have failed to grant the Federal Trade Commission Administrative Procedures Act rulemaking authority, leaving it hamstrung, and have failed to hold hearings on the widespread abuses of boilerplate affecting tens of millions of Americans daily.     

We at Fair Contracts believe that there should be greater focus on seeking a systemic, upstream solution to boilerplate.  Though some would hang their hats on piecemeal “improved disclosure” as a least invasive means of correction, such a course of action alone is tepid and wholly inadequate to the serious problems documented by Radin and others.  

Nor must we only wait for the next glacial restatement of contract law, or a revolution of contract theory that reverses the legal presumption of enforcement of harmful contract terms, or a different way to analyze the legality of fine print contracts, including treating them as torts as all of these are definitely long, long, long-run solutions.

Intermediary, if admittedly only partial, remedial steps exist that we should explore for innovation that could lead to a better future for consumers, including: 

• Dramatic elevation of public awareness of the rights removal hazards contained within the fine print, with a multi-pronged education and media campaign;

• Significant increases in data collection of contracts and scholarship across multiple industries, with more empirical research to ascertain the prevalence of harmful consumer provisions, their collusive origins, and their negative economic consequences, with examples of how consumer harm is caused to large categories of people who forfeit their rights without knowledge of doing so; 

• Promulgation of a model set of principles for provisions within, and reform of, the fine print;

• Outright legislative and regulatory bans (or workarounds – through ombudsman consumer review boards) on contract provisions that undermine the rule of law, fair competition and democracy, including the deprivation of consumers of the civil justice system and their First Amendment rights,  vendor assertions of no accountability (thus allowing contract law to eat tort law alive) and consumer disadvantageous unilateral modification powers; 

• Development of model state and federal legislation to ensure a fair regulatory playing-field;

• Development of a “fair trade” or “hypoallergenic” or “green-star energy-efficient”-type seal that does not necessarily signal a “fair contract” but does signal the absence of a known set of provisions that reduce consumer rights for those consumers who care about them, which should be most if the educational goals were attained, and thus obviate the need to read through the fine print for at least that standardized set of terms symbolized by the seal.  This would permit consumers an actual market within which to shop, should government fail to act to preserve their rights; and  

• Studying the consequences from other countries which are ahead in consumer protection.  There is a reason that the EU black and grey lists terms, as does Australia:  They are unfair to consumers and their governments do not let corporations dictate all the terms, rewriting and undermining in a private ordering those public policies passed as legislation.  In early April 2013, The Consumer Council of Hong Kong urged businesses to produce short and simple contracts that eliminate unfair terms and is starting to provide model contracts.  See: http://www.consumer.org.hk/website/ws_en/competition_issues/policy_position/2012040301.print

We should be debating these matters in the United States. We need an organized consumer constituency to reverse the contract peonage so reform efforts may gain the momentum needed to create alternatives to the unilateral, corporate-dictated status quo. 

[Posted, on Theresa Amato's behalf, by JT]