The No Reading Problem in Consumer Contract Law
Yale University - Yale Law School; Yale University - Yale School of Management
Yale Law School
May 13, 2013
Stanford Law Review, Forthcoming
Yale Law & Economics Research Paper No. 470
Instead of attempting to promote informed consumer assent through quixotic attempts to have consumers read ever-expanding disclosures, this Article argues that consumer protection law should focus on unexpected, unfavorable terms. We propose a system under which mass market sellers are required periodically to engage in a process of "term substantiation" through which sellers would learn whether their consumers held accurate beliefs about the terms of their agreement. Terms that meet or exceed the median consumer’s expectation would be enforceable even if buried or only available on request. But sellers could enforce unexpected, unfavorable terms only if they are disclosed in a "warning box" that has a government-provided standard border. To prevent overuse of the box, sellers would need (i) to exclude terms from the box that meet or exceed consumer expectations and (ii) to order terms in the box in descending order of consumer importance. Such a system of term substantiation coupled with targeted warnings about unexpected terms jettisons as unworkable the duty to read ideal. It instead economizes on consumer scarce attention by increasing the salience of those terms that are most likely to inhibit informed consent.
We report on the results of an original term substantiation field experiment documenting user expectations concerning unread Facebook EULA provisions. Consistent with our analysis, we find that users can correctly evaluate many of these provisions. Importantly, we also uncover the existence of a few unexpectedly, unfavorable terms that, under our proposal, would be presumptively unenforceable unless subject to heightened disclosure.
Accepted Paper Series
Date posted: May 14, 2013 ; Last revised: June 5, 2013
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