Business Litigation Alert: "Did They Really Do That?"

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General Mills Reverses Binding Arbitration for Facebook Fans

General Mills recently made headlines for its attempt to bind consumers to an arbitration agreement if they “liked” the company’s Facebook page, downloaded coupons, or engaged in other online activities related to the company’s brands. Not surprisingly, this raised significant concern in the media and with consumers – so much concern that General Mills has now reversed its stance.

The General Mills incident is not an isolated one.

Recently, the on-line news service Law360 reported on seeing “a trend of companies looking for ways to control or affect consumer behavior [and legal rights] through online terms and conditions.”

In one instance, according to Law360, Kleargear.com allegedly charged a Utah couple $3,500 for posting an on-line negative review, claiming that it violated a nondisparagement provision included in the company website’s terms and conditions. When the couple failed to pay, Kleargear.com contacted credit bureaus, which dinged their credit score, according to other published reports. The couple is now suing Kleargear.com.

While companies will continue to try to tweak on-line user/consumer agreements to their advantage, here are some guidelines that may be helpful in avoiding the backlash that General Mills and Kleargear.com experienced:

  1. Explain Yourself – General Mills attempted to implement the changes with little fanfare, and little warning to consumers. A New York Times article is actually what alerted the public. Be in control of your message, and communicate directly with customers/consumers before the media does.
  2. Will It Hold Up In Court? – Even though courts have made pro-arbitration decisions, General Mills’ attempt to bind a simple action such as visiting a website with giving up substantial legal rights is per se questionable. Make sure that any modifications are actually enforceable.
  3. What is the Perceived Impact? – While General Mills said that it was merely trying to streamline the dispute resolution process and cut costs, consumers perceived it as a heavy-handed move that would adversely impact them. Put yourself in the customer’s shoes and consider how any change to your agreement will be perceived.

The General Mills and Kleargear.com stories should serve as cautionary tales for companies looking to make significant changes to user agreements. Careful consideration of the impact of any proposed change and proper implementation can go a long way to avoid the question: “Did they really do that?”

 

Topics:  Arbitration, Binding Arbitration, Facebook, General Mills

Published In: Alternative Dispute Resolution (ADR) Updates, General Business Updates, Communications & Media Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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