You can't just put anything you want into your terms. A company can't declare it gets your kidney and your firstborn child if you subscribe to watch 'Agatha All Along'. — Photo by Sunil Ray on Unsplash
Have you ever signed a lengthy legally binding contract without consulting an attorney or reading the document in its entirety?
Almost certainly.
Most of us don't read the terms and conditions that pop up on apps and websites. You click a box that says "I accept" so that it goes away and you can proceed with whatever you were signing up to do or buy.
Over the past month, there's been an exodus from X, the site formerly known as Twitter, partly in response to its updated terms. The mass migration to other social media sites – many to competitor Bluesky – continues a trend that began when Elon Musk took over Twitter in 2022. Some of the recent user migration was a response to Musk's active role in getting Donald Trump elected. But many also objected to X's new terms of service, which went into effect Nov 15. The new terms say X can use people's posts to train its artificial intelligence.
The pop-up boxes have made other headlines in recent months. This summer, lawyers for Disney filed a motion that a widower could not sue for wrongful death after his wife's fatal allergic reaction at a Disney restaurant – because he had agreed to an arbitration clause when he signed up for a one-month trial of its Disney+ streaming service. Disney dropped the motion after public pressure.
Lawyers for Uber made a similar argument in a case concerning a New Jersey couple who were seriously injured after a crash. The company said they had agreed to terms and conditions that included arbitration when they signed up to order pizza from Uber Eats in 2022. The couple said it was their 12-year-old daughter who'd clicked "I accept." A court of appeals sided with Uber.
And just this month, tech news website 404 Media reported on Secret Service emails that detailed an internal debate over whether the agency could track people's locations without a warrant because those people had agreed to share location data when accepting some apps' terms of service.
Arbitration clauses are growing more common
Asking customers to agree to terms of service is not a new thing for businesses. It predates the Internet. But clauses like arbitration are becoming more common, said Karl Kronenberger, a partner at Kronenberg Rosenfeld LLP, which has litigated on behalf of both companies and consumers on this issue.
"Companies, especially financial institutions, want to bind people to arbitration because it's quicker, it's cheaper" for them – by effectively making it so difficult to legally challenge them that it's not worth it, Kronenberger said.
When you agree to arbitration, you're giving up your right to sue the company and have a jury and judge decide the outcome. Instead, an arbitrator – often a former judge or attorney – is assigned and hears from both sides, then makes a binding decision.
Terms of service can also dictate which state's or country's laws govern the terms. According to Kronenberger, companies typically seek to move litigation out of states with stronger consumer protection laws, like California. (X's new terms of service state that lawsuits against the company must be filed in Texas.)
The terms can also limit how much money you can get in damages, and prohibit class action claims – "which means if the amount that was lost is small, it doesn't make sense (for an individual) to arbitrate it," Kronenberger said.
"Often the terms are so onerous that no one's resolving disputes," he said. "They just go unresolved."
Pushing the boundaries
You can't just put anything you want into your terms. A company can't declare it gets your kidney and your firstborn child if you subscribe to watch Agatha All Along.
But companies are often exploring new frontiers of what customers can legally be bound to, said Jef Pearlman, a clinical professor of law and director of the IP and Technology Law Clinic at the University of Southern California. And when one company finds an advantageous clause that holds up in court, others often "move in lockstep" and add something similar to their terms, he said.
At the same time, if a clause goes too far, a judge could declare it unenforceable and invalidate the entire agreement.
Companies know no one is reading these. Judges and arbitrators know no one is reading these. Is this really how contract law is supposed to work?
"I am torn on this issue, because I think companies are taking advantage of terms and conditions to get a better position if there's ever a dispute with the customer," Kronenberger said. "I think there is some overreaching."
But at the same time, he said, companies take a risk bringing a product or service to market, and binding consumers to terms and conditions controls some of that risk by deterring frivolous lawsuits.
Do consumers have any alternatives?
So what can you, the consumer, do? It's not realistic to expect people to sit down and read the entire terms of service every time they sign up for a website.
In the course of reporting this column, I was asked to agree to one popular news site's terms of sale, terms of service and privacy policy, which added up to 82 pages of text. A survey of the 13 most popular apps in the United Kingdom found it would take 17 hours to read through the terms and conditions for all of them.
If you say you always read through every line of the terms and conditions, you're probably lying. A survey from ProPrivacy.com found 33% of respondents claimed they had thoroughly read an agreement before signing it. Only 1% actually had.
Even if you read the whole thing, there isn't much you can do about any of it, Pearlman said. These are contracts of adhesion, which means you enter into them without the chance to bargain their terms. Hiring a lawyer to tell Ticketmaster you'd like to bargain terms before you buy Taylor Swift tickets will likely only result in you missing the "Eras" tour.
If you're signing up for a service where you'll have money at stake, like an investment app or crypto trading platform, that's a good time to actually sit down and read the terms before signing up.
Even lawyers don't always do the reading. Pearlman said the last time he bought a new TV, he got a pop-up asking him to agree to the terms and conditions. It was page 1 of 129.
He said he clicked "I accept" and moved on.
"No way I was going to read all that." – San Francisco Chronicle/Tribune News Service
