According to the Study, “opt-out rights have major limitations” because most consumers do not read or exercise their opt-out rights. The Study states:
Underlying this dystopian viewpoint is the implied, but untenable, premise that consumers should be free to enter into electronic contracts with companies and obtain the benefits of those contracts without bearing any responsibility for reading or understanding the contract terms. In other words, not only do consumers not read opt-out provisions, but they should not suffer the consequences of not reading them because they are overly prolix, buried within the arbitration clause and/or unduly burdensome to comply with. There is nothing that will satisfy the nay-sayers: if an arbitration clause does not contain an opt-out provision, they claim the arbitration clause is unconscionably adhesive; if an arbitration clause does contain an opt-out provision, they claim the opt-out provision is unconscionable because it is too complicated, hard to find, understand or comply with and/or (as Professor Sovern has argued) is the product of “dark patterns” in the website.
Of course, similar arguments have been made—and rejected—long before the internet even existed. As the Supreme Court held 150 years ago in Upton v. Tribilcock (1873): “It will not do for a man to enter into a contract, and, when called upon to respond to its obligations, to say that he did not read it when he signed it, or did not know what it contained. If this were permitted, contracts would not be worth the paper on which they are written. But such is not the law. A contractor must stand by the words of his contract; and, if he will not read what he signs, he alone is responsible for his omission.” To support that holding, the Court cited case law dating back to 1815. While society and technology have obviously changed between then and today, and computers have in many instances replaced “paper,” it is just as true now, as it has been historically, that consumers should be held responsible for their own actions and inactions in contracting with companies, whether electronically or on paper.
An example of the low bar set for consumers in the Study is the assertion that asking the consumer to mail back an opt-out notice to the company is “remarkably cumbersome” for the consumer:
Opt-out procedures, practically speaking, create significant transactional friction. Opting-out requires fairly sophisticated knowledge and proactive steps by the user. Sometimes procedural burdens are substantial. [Company’s] opt-out procedures, for instance, are remarkably cumbersome. In order to opt-out of [Company’s] arbitration agreement, a consumer must mail a letter—mail a physical letter, not a “click” on a device or even an email—to a specific address in San Jose, California. Opting out of the arbitration agreement (printing, filling out, and then mailing a form) is considerably more difficult than entering into the contract (a tap as the user opens the app for the first time).
(The italics are the authors’). Since when is mailing a “physical letter” to a specific address “remarkably cumbersome”? The last we checked the U.S. Postal Service was still operating. Certainly, requiring a consumer to mail back an arbitration opt-out notice is no more burdensome than requiring a putative class member to send back a written opt-out notice if he or she does not want to participate in a class action settlement or a certified class action. That is a standard requirement of FRCP 23(c) and has been for many decades. As the U.S. Supreme Court emphasized in Phillips Petroleum Company v. Shutts, due process is satisfied when an absent plaintiff has an opportunity to remove himself or herself from the class “by executing and returning an ‘opt out’ or ‘request for exclusion’ form to the court.” If constitutional due process is satisfied by requiring a person to send back a written notice opting out of a class, clearly it is not “remarkably cumbersome” (or “crazy,” to use Professor Sovern’s term) to ask a consumer to send back a short written notice opting out of arbitration.
Moreover, allowing the consumer to opt out within “X days” of entering into the contract is fairer to consumers than requiring them to make a decision on the spot. The additional time provides a more meaningful opportunity to consent. Whether or not to opt out of arbitration is an important legal decision that should not be made hurriedly in the flurry of reviewing and signing contract paperwork. It also allows time for consumers to consult in private with their lawyer, family or friends or spend time on the internet investigating the pros and cons of arbitration in order to make an informed decision.
Also, in cases where a consumer enters into the contract on the company’s premises, the consumer might feel pressured by the surroundings and feel uncomfortable asking questions. That factor that is eliminated when additional time to opt out in private is provided. Writing a short note to the company after the fact ensures that the consumer is truly focused on the issue of arbitration and has had time to make an informed decision– just the opposite of a “knee-jerk” reaction that is the consequence of having to make an important legal decision on the spot at the time of execution.
Ultimately, the Study reflects the kind of hostility to arbitration that the Federal Arbitration Act (FAA) was enacted to prevent. The Study claims that “consumers almost never read TOUs at the moment of contract formation,” but it only seeks to denigrate the arbitration clause and opt-out provision in the TOUs. This is a classic example of singling out arbitration for special treatment, which the FAA prohibits as a matter of federal policy.
Finally, as we have argued previously, if consumers are “clueless” about arbitration (Professor Sovern’s term), don’t just compile data about them. Rather, help educate them and urge the CFPB to do so. After all, professors are educators. The CFPB has shirked its responsibility to educate consumers about the many benefits of arbitration, particularly when compared with class action litigation, even though it has virtually unlimited resources and a dedicated educational arm, the Division of Consumer Education and External Affairs. If, as the Study argues, consumers are outbalanced by companies when electronic contracts are formed, education is the key to putting both sides on a level playing field.