From our cellphone and cable packages to our mortgages, insurance policies, student and payday loans, credit cards, bank accounts, travel tickets, software, rental cars and much more, corporations routinely seize our bargaining power and critical rights without our informed consent. Want to give away the right to use your image in a commercial endorsement? Want to gag yourself from complaining about bad service or a defective product? Want to allow a corporate wrongdoer to physically harm or steal from you and not be responsible in court because you “agreed” to costly arbitration in a faraway state? Of course not. Yet you “accept” such terms all the time.
Standard form contracts are everywhere, snaring consumers into an insidious peonage through the “tricks and traps” of fine print, as Senator Elizabeth Warren has called them. Sometimes longer than a Shakespeare play but far less readable, boilerplate contracts are indecipherable to most humans. The opportunity to negotiate does not exist. Comparison shopping for better terms is improbable if not impossible. Even if one could easily obtain the contracts upfront and undertake comparisons, corporations don’t compete on these terms. And the bad news is that, as Ralph Nader notes, “underneath all is the contract.” We should think of boilerplate contracts as “contract asbestos.” They may “facilitate” commerce by maximizing corporate efficiencies, entitlements and immunities; but as with asbestos, they are toxic to consumers. We are exposed to often invisible, rights-denying terms that may harm us years after the initial agreement.
Thanks to a series of Supreme Court decisions in favor of corporations that use forced arbitration, consumers who “agree” to such terms may lose their right to go to open court, have a jury trial, bring class actions, and vindicate their substantive rights at the federal or state level. Though small-claims court or challenges of unconscionability, fraud and duress may remain, what do we tell the person who wants to challenge predatory loan practices with others, usually poor, who have been wronged by fraudulently misrepresented, usurious rates? One bad contract can ruin someone’s credit, employment prospects and the chance to be heard in court.
The Consumer Financial Protection Bureau has the power to protect consumers against assaults in financial contracts, but since its launch in 2011, it has been forced to play defense. The Senate Republicans left CFPB director Richard Cordray’s appointment in doubt until last summer, and some continue to seek to replace his position with a commission, which would frustrate regulatory efficiency.