Nancy S. Kim argues that wrap contracts – online contracts “that can be entered into by clicking on a link or on an ‘accept’ icon” – limit a company’s liability, “diminish your privacy rights, take away your intellectual property and even deprive you of your free speech rights”:
In [a] disheartening example of abuse by wrap contract, a company threatened to fine a consumer named Jen Palmer $3500 for posting a negative review about it on a consumer review website. The company, KlearGear, didn’t claim that the review was false; rather, it claimed that her review ran afoul of a non-disparagement clause in the company’s online terms of sale. Palmer claims that the company reported her to a credit reporting agency which negatively affected her ability to obtain loans for a new car and home repairs. What’s particularly troubling about this example is that it’s unclear which version of the contract applied or that Palmer was even subject to KlearGear’s contract since the company did not complete the sale to her (which was the basis of her negative review). Yet, very few consumers would be willing to sue to test the validity of a wrap contract in court.
The wrap contract, by its “legal” nature, can be used to intimidate consumers and deter them from acting in ways that are perfectly lawful. They allow companies to change the rules that would ordinarily apply between a company and a consumer, giving companies all the power to enforce provisions to their advantage.
The solution to wrap contracts requires raising consumer awareness of its potential dangers. Cognitive biases work against the consumer. Consumer optimism and myopia make it easy to ignore latent harms in favor of immediate gratification — why fret about hidden terms when you want to get online now? The herd effect lulls users into a false sense of security since everybody else is clicking “agree” too.
But the consumer is hardly to blame here. There is simply too much information that it would be unrealistic to expect consumers to read every wrap contract they encounter, but consumers can and should make some noise when they encounter unfair terms. They should complain to companies, the state legislature, their friends. (Faircontracts.org has other suggestions here.) What they should not be is indifferent about the status quo.