General Mills Forces Customers To Waive Their Right To Sue

Posted in Consumer Safety,Our Blog on April 23, 2014

Last week, consumer rights advocates turned their attention to a somewhat unusual place: breakfast cereal. Word began to spread on the internet that General Mills-maker of Cheerios, Lucky Charms, Cocoa Puffs, and many other popular cereals in addition to food brands like Pillsbury, Yoplait, Betty Crocker, and Haagen-Dazs-was giving away online coupons to registered users. These coupons carried with them a catch, however, and a pretty big one at that: To receive and use the coupon, the future customer had to agree to waive her right to sue the company.

So if, for example, a child swallowed a spoonful of Lucky Charms containing a razorblade, his parents would have very limited options for legal recourse against General Mills if they’d used one of the company’s coupons to buy the cereal. They’d be denied a jury trial in open court, forced instead into arbitration, a closed-door procedure known to be very friendly toward big businesses in disputes against consumers.

Such a practice is known as ‘forced arbitration’ and it’s becoming increasingly common. We all are familiar with long, tedious service agreements, and we tend to scroll all the way to the bottom of the screen and select “Yes I Agree,” without ever reading and considering the language to which we’re agreeing. Though it doesn’t feel like it, we’re signing a contract every time we do this… and when a contract is written by a company expecting you not to read it, you can be sure who the terms will favor.

Forced arbitration clauses have been used by technology companies for years (AT&T was a pioneer in this field). But General Mills is the first food company to do it, and the way it’s tricked consumers into agreeing to its terms are shaky at best, and sleazy at worst. It wasn’t just giving away coupons for modest discounts (usually 50 cents off the price of a box of cereal) in exchange for arbitration agreements, it was posting legal fine print on its Facebook page that users who “joined the General Mills community” merely by “Liking” the company agreed to waive their rights as well, among other dishonest tactics.

Arbitration Clause In An Agreement Users Accept When They Use PayPal, Just One Of Many Companies That Employs These Types Of Agreements

Thankfully, the outrage of the online community in response forced General Mills’ hand, and it quickly amended its legal terms to remove the new language. That is good news, and it’s heartening to know that customers can affect the behavior of companies if their voices are loud enough. However, the overall trend is worrying. The legal restrictions that prevent deep-pocketed corporations from running roughshod over consumers are being loosened more and more each year. In 2011, the US Supreme Court upheld that forced arbitration clauses are perfectly legal, and the floodgates opened for any and every company to start using them. As public advocacy group Public Citizen points out, General Mills is far from the only company to use arbitration clauses; they’re used by companies whose products we use every day.

The right to a trial by jury is a fundamental American right-it levels the playing field when the ordinary citizen goes against the major corporation in a courtroom, it’s David’s sling against Goliath. Big companies know this, and they work hard to limit how often they have to go to trial. Forcing consumers into arbitration saves them enormous amounts of money, and these huge companies have to look after their bottom line to please their shareholders. So even though General Mills has backed off (at least for now), there is nothing stopping more and more companies from trying similar tactics. And in all likelihood, they will succeed.