Cheerios: Download a coupon, lose your right to sue

A recent New York Times article warned consumers that by clicking “Like” on the Facebook page of General Mills, the maker of Cheerios and other products, they would be agreeing to limit themselves to resolve disputes with the company through informal emails or binding arbitration. Consumers would have no recourse to the courts and could not participate in a class proceeding even within the arbitration process. Arbitration clauses are common in business-to-business contracts, but General Mills was attempting to impose one on its relationships with consumers. How? By way of an update to the Legal Terms page of its website. The new Legal Terms would apply in the following circumstances:

These terms are a binding legal agreement (“Agreement”) between you and General Mills.  In exchange for the benefits, discounts, content, features, services, or other offerings that you receive or have access to by using our websites, joining our sites as a member, joining our online community, subscribing to our email newsletters, downloading or printing a digital coupon, entering a sweepstakes or contest, redeeming a promotional offer, or otherwise participating in any other General Mills offering, you are agreeing to these terms.

The arbitration provision is worded as follows:

ANY DISPUTE OR CLAIM MADE BY YOU AGAINST GENERAL MILLS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR YOUR PURCHASE OR USE OF ANY GENERAL MILLS SERVICE OR PRODUCT (INCLUDING GENERAL MILLS PRODUCTS PURCHASED AT ONLINE OR PHYSICAL STORES FOR PERSONAL OR HOUSEHOLD USE) REGARDLESS OF WHETHER SUCH DISPUTE OR CLAIM IS BASED IN CONTRACT, TORT, STATUTE, FRAUD, MISREPRESENTATION, OR ANY OTHER LEGAL THEORY (TOGETHER, A “DISPUTE”) WILL BE RESOLVED BY INFORMAL NEGOTIATIONS OR THROUGH BINDING ARBITRATION, AS DESCRIBED BELOW.

Noteworthy from the above is that General Mills is not only attempting to apply the above arbitration provision in circumstances “relating to this agreement,” but also relating to a consumer’s “purchase or use of any General Mills service or product.” The company goes on to say as much in its Legal Terms: “This Section 3 is intended to be interpreted broadly to encompass all disputes or claims arising out of this Agreement or your purchase or use of any General Mills product or service for personal or household use.” Negative public reaction to the change of the Legal Terms was immediate. It was unclear whether the “joining our online community” provision in the above section of the Legal Terms included clicking “Like” on General Mills’ Facebook page. After the ensuing public backlash, General Mills conceded publicly that simply clicking “Like” on its Facebook page would not bind consumers to arbitration. Downloading coupons and joining General Mills’ own online communities would still have that effect, as would buying its products. It remains to be seen whether the Legal Terms will apply simply by purchasing a General Mills product at the grocery store and to what extent consumers are aware that doing so limits their legal rights. Ontario’s Consumer Protection Act, 2002 bans similar practices and deems as invalid any requirement in a “consumer agreement” (an agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment) that requires disputes to be submitted to arbitration. This limitation only applies to agreements with consumers, who are defined under the Act to be individuals acting for personal, family or household purposes and not for business purposes.