Fine print boilerplate is everywhere, but what can be done to stop it? Theresa Amato writes in The Nation that the Consumer Financial Protection Bureau should take four steps to promote fairness in consumer contracts:
- Prohibit forced arbitration clauses in consumer contracts
- Maintain a searchable database of all standard form contracts used by the industries it regulates
- Develop its own “consumer-road-tested contracts” and prohibit certain terms, such as those that prohibit public criticism of the business involved, or waive liability for negligence.
- Promote a “fair contract” symbol to make it easy to identify contracts which conform to the standards proposed.
Amato’s statement of the problem is so clear that it deserves to be quoted:
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.
Her first proposal has been on the agenda since the creation of the CFPB. When the CFPB was created, it was given the power to study forced arbitration clauses. That study is underway, and if the CFPB decides that forced arbitration causes are unfair, it can ban them. Many private individuals and non-profit groups have submitted information to the CFPB, ranging from finance industry lobbyists and lawyers who want to keep arbitration clauses, to consumer lawyers and academics.
Amato’s second proposal is an expansion of something the CFPB already does for credit card contracts. The CFPB’s credit card contract database is a useful way to subject credit card agreements to public scrutiny. The database is not just useful to academics or regulators, the database has led to consumer news stories such as one from Bankrate.com, pointing out dangerous terms in credit card fine print. Expanding the database would open more industry standard contracts to this sort of scrutiny.
The CFPB has also drafted its own simplified credit card agreement (with no arbitration clause). However, the CFPB was careful to point out that it was not a “model” agreement.
Would “fair contract” marks, model terms and easy access to agreements free consumers from oppressive fine print? Perhaps, but only if at least some large companies were willing to adopt the model contracts. At present, even a consumer wanting to avoid unfair fine print rarely has much choice between standard form contracts.