61 Pages Posted: 15 Aug 2014 Last revised: 9 Apr 2015
Date Written: 2014
Part III provides a content analysis of the qualities of the ninety-four arbitration clauses deployed by the 329 social media sites. Twenty-nine percent of all SNS (U.S. and foreign) require consumers to accede to arbitration, often in distant forums, where the cost of filing and travel far exceeds the capped damages and limited remedies afforded to the consumer. Forty-two percent of the U.S. headquartered sites mandate arbitration, while only thirteen percent of the foreign social media sites have any arbitration option. The mean arbitration clause required a reading comprehension level of grade 15. Our research shows that while hundreds of millions of consumers are subject to arbitration clauses in social media TOU, consumers filed less than ten arbitration cases in the past two years with the American Arbitration Association or JAMS, the two leading arbitration providers. This miniscule rate of arbitration filings is strong unobtrusive evidence that arbitration in SNS cases is neither cost-efficient nor a practical remedy for injured consumers. The cryptic arbitration clauses deployed by social media providers are consistently one-sided and fail to give users ample warning that they foreclose all realistic remedies for breach of contract, torts, intellectual property infringement or other causes of action.
Part IV uses the statistical findings presented in the earlier Parts to demonstrate that social networks’ TOU frequently violate nine standard provisions of the European Union’s (EU) Unfair Contract Terms Directive (UCTD) by including terms that are black listed in the EU as fundamentally unfair. We recommend that Congress enact EU-style procedural and substantive mandatory terms to address the fundamental unfairness of TOU rights-foreclosure clauses such as forced arbitration, total warranty disclaimers, and damages capped to a nominal amount. To address the problem of impenetrable TOU, providers should be required to draft TOU with a minimum readability level coupled with standardized disclosures. We also propose that Congress enact black lists of prohibited clauses and grey lists of suspect provisions modeled on the European Union’s Unfair Contract Terms Directive. Harmonizing or localizing social network consumer protections will ultimately lead to greater certainty for providers as well as protect the basic rights of global social media users.
Suggested Citation: Suggested Citation
Rustad, Michael L. and Koenig, Thomas H., Wolves of the World Wide Web: Reforming Social Networks’ Contracting Practices (2014). Wake Forest Law Review, Vol. 49, p. 1431, 2014; Suffolk University Law School Research Paper No. 14-25. Available at SSRN: https://ssrn.com/abstract=2479918