• Study finds social media users are being stripped of legal rights Wednesday, April 23, 2014

    Users of social media sites such as Facebook, Instagram and Match.com are often — and often unknowingly — agreeing to give up their basic legal rights in disputes involving loss of privacy, disclosure of credit card information, rights of publicity, intellectual property rights and breaches of contract, according to two Boston professors who have studied the issue.

    Michael Rustad, a professor at Suffolk University Law School, and Thomas Koenig, professor of sociology at Northeastern University, analyzed “terms of use” on more than 300 social media sites around the world and reported their findings in a paper, “Wolves of the World Wide Web: Reforming Social Networks Contracting Practices,” that will be published by Wake Forest Law Review in early 2015.

    Suffolk University law professor Michael Rustad

    Suffolk University law professor Michael Rustad

    “Social media TOU [terms of use] are the latest evolutionary stage in rights-foreclosure schemes masquerading in the clothing of contract,” Rustad and Koenig wrote in their paper. “Consumers, often unknowingly, waive all meaningful rights, warranties, and remedies….’Private tort reform’ is an apt description of how social media providers are using contract to cannibalize consumers’ rights and remedies by inserting unread one-sided clauses mandating class action waivers, predispute mandatory arbitration, nominal or no monetary damages, abridged statutes of limitations, and one-sided choice of law and forum clauses.”

    “What corporatists cannot get through the very public front door of Congress [through so-called “tort reform”], they are getting through the private back door through contract,” Rustad told Corporate Crime Reporter. “Terms of use are increasingly shunting users away from the public court system into private arbitration, where arbitration clauses prohibit punitive damages awards. Punitive damages is a remedy with a rich legal history in constraining abuses of power, which explains its relevancy. Punitive damages have been crippled because of the success of the tort reform movement in convincing the U.S. Supreme Court and ordinary Americans that this remedy was in need of radical downsizing.”

    Social network sites get users to unwittingly “agree” to limit their rights by using a “browsewrap,” described in the paper as “an online standard form contract where a consumer purportedly manifests assent to the provider’s terms by simply accessing the website.” As a result the user “agrees” to terms without having to click a hyperlink or take any other form of action to indicate the terms were actively agreed to.

    Northeastern University sociology professor Thomas Koenig

    Northeastern University sociology professor Thomas Koenig

    “A social media provider can foreclose the possibility of jury verdicts, punitive damages, class actions, consequential damages, and any other meaningful remedy by requiring their users to submit to arbitration,” Rustad and Koenig wrote. “Consumers that…are subject to browsewrap terms of use, waive their right to a jury trial, discovery, and appeal, without reasonable notice that they are waiving these important rights.”

    Rustad and Koenig found 71 of the 308 social network sites they investigated have TOU that prohibit users from taking any disputes with the site to court. “Our data confirms that these social networks devise ADR [alternative dispute resolution, such as arbitration] clauses that systematically foreclose user rights, while aggressively expanding their own legal options,” Rustad and Koenig wrote. “The great majority of arbitral clauses failed to explain that this private justice system forecloses basic rights such as the right to a written opinion, an appeal, discovery, or jury trial.  Many TOU did not provide users with basic information when eliminating important rights such as joining class actions, conducting discovery, or pursuing small claims.”

    In arbitration, disputes are decided not by a judge and citizen jury but by an arbitrator chosen by the social network whose decision is final. “Hundreds of millions of social media users are subject to arbitration filings before the American Arbitration Association [AAA] and the Judicial Arbitration and Mediation Services [JAMS],” Rustad said. “The cost of filing an AAA consumer arbitration is $200; JAMS charges $250. Since most arbitration clauses contain anti-class action waivers, it is not possible to join small dollar amount claims. When the cost of submitting to arbitration far exceeds potential recovery, no lawyer or economically rational consumer will initiate a case. Anti-class action waivers slam the door shut to any practical remedy.”

    Further, the social network also dictates where the arbitration will take place; for instance, Rustad and Koenig point out Snapchat requires all disputes be heard by an arbitrator in Los Angeles, no matter where the consumer lives. “Modern technology easily permits non-appearance arbitration through the Internet or by telephone,” Rustad said. “But we found that few providers offer this or other alternatives that would level the playing field. The costs of travel, lodging, legal advice and other expenses associated with consumer arbitration makes it even more unlikely that consumers will arbitrate, much less litigate, their grievance.”

    In any event “terms of use” are not widely read — or understood. Rustad and Koenig refer to a study that showed only one or two in a thousand users (0.1-0.2%) read the terms of use, and even if the terms are read, the average American is not likely to fully comprehend the contract he or she is agreeing to. “Social media providers draft TOU at a reading level of grade 11 or 12, significantly above the eighth- to ninth-grade reading level of the typical U.S. high school graduate,” they wrote. “Social media providers draft rights-foreclosure clauses at or above an average college graduate’s reading level. This finding casts doubt on a fundamental premise of the law of online contract formation, that an opportunity to review is sufficient to engineer contractual consent. SNS [social network sites] users have an opportunity to read the TOU but, in the United States, providers have no corresponding duty to make their terms of use readable.”

    –J.G. Preston

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