Why People Are Freaking Out Over General Mills' New Legal Policy

Moneybox
A blog about business and economics.
April 18 2014 4:45 PM

Why People Are Freaking Out Over General Mills’ New Legal Policy

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Make sure to read the fine print.

Photo by Scott Olson/Getty Images

Update, April 21, 2014: On Saturday, General Mills announced that it had reversed the legal changes made last week and reverted to its original terms. The changes, the company said, had been "widely misread" and caused concern among consumers. "We never imagined this reaction," General Mills wrote in a blog post. "On behalf of our company and our brands, we would like to apologize. We're sorry we even started down this path." So go ahead and download those coupons.

Alison Griswold Alison Griswold

Alison Griswold is a Slate staff writer covering business and economics.

Starting today, you might want to think twice about downloading a dollar-off coupon for Cinnamon Toast Crunch or a two-for-one discount on Yoplait. Those small savings will now cost you the right to sue.

General Mills, the massive food company behind Cinnamon Toast Crunch, Yoplait, Cheerios, and dozens of other labels, added language to its website this week that fundamentally alters its customers’ legal rights. Under the new terms, people who interact with General Mills in a broad range of ways—downloading a coupon online or entering a contest, for example—waive their right to class action and agree to resolve any disputes with the company through informal negotiations or binding arbitration.

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To get a sense of just how broad the umbrella for these class action waivers are, here’s a relevant section on the changes from General Mills’ website:

In exchange for the benefits, discounts, content, features, services, or other offerings that you receive or have access to by using our websites, joining our sites as a member, joining our online community, subscribing to our email newsletters, downloading or printing a digital coupon, entering a sweepstakes or contest, redeeming a promotional offer, or otherwise participating in any other General Mills offering, you are agreeing to these terms.

Needless to say, people are unhappy. After all, who wants to think about forfeiting legal rights to a massive corporation when they’re just trying to get a discount on Pillsbury cookies and Toaster Strudel? And waiving your right to a class suit feels like a tall price to pay for a few dollars or cents in savings.

“I will have to take to wearing a hat into the grocery store that says, in boldface print of course, ‘By accepting payment for any purchases I may make, you hereby agree that trial by jury and lawsuits including class actions remain available means for the resolution of any disputes,’” says Ted Mermin, executive director of the Public Good Law Center and a professor of consumer law at UC–Berkeley School of Law. “'I will set my Web browser to carry a cookie conveying the same message.'”

Joking aside, class-action waivers, while disadvantageous to consumers, have been quite common ever since the Supreme Court upheld them in its 2011 ruling in AT&T Mobility v. Concepcion. “The case provides corporate America with another useful tip on how to avoid costly litigation: If you haven't already done so, rush to lock your customers and/or employees into invisible mandatory arbitration agreements that will bar them from challenging your misconduct in a class-action suit,” Dahlia Lithwick wrote in Slate at the time.

And rush they have. AT&T, Sprint, eBay, Amazon, and Dropbox are just a handful of the companies that have introduced arbitration clauses and class-action waivers into their terms of service—aka those dense pages of legalese that only the rarest of users ever bothers to read in full. “Class action waivers are everywhere,” says Florencia Marotta-Wurgler, a professor at New York University School of Law. Her research shows that fewer than one in 1,000 people will click on website links to view the full terms of a contract before hitting “I agree.”

What’s so unusual about the General Mills situation is that consumers, all of a sudden, are taking note. That’s at least in part because the changes have drawn extensive and critical coverage from the media, but also because the scope of how consumers can become subject to this agreement is unprecedented.

“What's unusual about General Mills' move is that we haven't seen such a broad-based waiver from a consumer packaged goods company,” explains Eric Goldman, a professor at Santa Clara University School of Law and director of its High Tech Law Institute. “General Mills is using a direct point-of-contact with its customers—its Web interactions—to create new contract terms that would be difficult or impossible through the normal distribution chain.”

Compounding that is the fact that General Mills largely botched the rollout of its new policy. Rather than broadcasting the changes, the company quietly added the terms to a legal statement online and has since appended a thin gray advisory bar to its website. Initially, though, the New York Times reported that placing an order through the General Mills online store did not trigger any sort of notice that the company had changed the legal terms governing the purchaser.

When consumers aren’t made to explicitly agree with terms of use, a major change like a class-action waiver won’t be considered enforceable unless the company can demonstrate it gave “reasonable notice.” This notification needs to be fairly prominent, so the initial update on the General Mills website may not have made the cut. “Courts have said it’s not reasonable notice when companies do way more than that,” Marotta-Wurgler notes.

We reached out to General Mills for comment, and a spokesman referred us to a post on the company's blog. "The policy doesn’t preclude a consumer from pursuing a claim. It merely determines the forum," they write. "Arbitration is a straightforward and efficient way to resolve such disputes."

Even if the General Mills changes do hold up, legal experts say it might not be such a bad thing. “I will say that I will be grateful to General Mills if its foray into forced arbitration makes people start to ask a little more seriously whether we really want a society in which fundamental rights can be waived with the click of a mouse,” says Mermin. If nothing else, people certainly are talking.

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