If consumers "like" your brand or business, does that mean they won't be able to sue you?
That's what cereal giant General Mills is attempting to do, by forcing those who "like" them on Facebook, enter sweepstakes, or download coupons to agree to arbitration instead of suing in civil court for any potential legal disputes. The New York Times suggests that even purchasing General Mills products might impose "forced arbitration" on consumers.
Can a similar arbitration policy keep your company's fans from suing your business?
In 2011, the U.S. Supreme Court determined that businesses could force customers into one-on-one arbitrations with arbitration provisions in service contracts, legally denying those customers the right to sue alone or arbitrate as a group.
Business owners have successfully used arbitration clauses in boilerplate contracts for decades to funnel conflicts into arbitration and away from courts. Your business should be comfortable with the idea of requiring arbitration for clients or even employees with whom you have significant agreements.
However, this new class of arbitration is somewhat different. General Mills is attempting to force customers into arbitration simply by "liking" the company on its Facebook page or participating in its promotions. Mother Jones reported in 2008 that Texas' fast-food mainstay Whataburger had posted a notice in one of its locations declaring that anyone who entered the premises was subject to arbitration.
It seems that overreaching provisions like these would be in danger of being struck down as unconscionable, not to mention giving your business a PR black eye.
Be Careful With Arbitration Policies
Although General Mills may be legally within its rights to compel arbitration when a customer enters a contest or downloads a coupon, your business may want to shy away from trying to deny consumers the right to sue simply by "liking" you.
Your business' Facebook page can serve as your company's customer service portal as well as its public face. Your audience, including future customers, may be upset by policies that essentially trick them into giving up their right to sue while getting nothing in return. Customer loyalty and goodwill may be intangible business assets, but you'll miss them when they're gone.
Even if your policy which attempt to force all consumers into arbitration isn't struck down in court, you may have saved more by entering into a settlement agreement than compelling arbitration.
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- You're Not Allowed to Sue General Mills If You Like Them on Facebook (Gizmodo)
- Attorney, Arbitration, or Mediation? (FindLaw's Free Enterprise)
- Enforcement of Arbitration Clauses: Supreme Court Rules Them Valid in Union Contracts (FindLaw's Free Enterprise)
- Texas Arbitration Agreements Can Be One-Sided and Legal (FindLaw's U.S. Fifth Circuit Blog)