Klein & Wilson

Could participation in rewards programs void the right to sue?

The next time you sign up for a rewards program offered by a retailer, or actually “like” a product on Facebook, you may be forfeiting your right to bring a lawsuit against them. According to a recent New York Times article, a growing number of companies in California and across the United States are using this tactic as a possible way to insulate themselves from the possibility of class action lawsuits.

The article highlighted the changes that Breakfast cereal giant General Mills made to the legal terms that accompany its coupons and online offerings after a California court refused to dismiss a lawsuit ostensibly based on consumer fraud. The changes require disputes related to coupon based purchases to be resolved through binding arbitration. Legal experts noted that General Mills is one of the first food companies to impose “forced arbitration” clauses on consumers who use online coupons.

After the U.S. Supreme Court ruled that it was acceptable for businesses to limit consumers’ ability to join together in class action lawsuits by accepting terms in a standard limitation form, a number of companies have followed suit, including credit card issuers and cell phone providers. The requirement that disgruntled consumers opt for binding arbitration basically protects companies from the high costs of litigation and the exposure of costly judgments.

Even with this possibility, a court would still have to rule on the question of whether a consumer actually knew that he or she is waiving or limiting their rights to pursue legal remedies in a court of law. This is where having an experienced attorney can be helpful in obtaining justice. 

Source: NY Times.com “When ‘liking’ a brand online voids the right to sue,” Stephanie Strom, April 16, 2014

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