For the past couple years, I have had the privilege of working as a consumer attorney. I’ve occasionally written about some of the topics I’ve encountered as a consumer lawyer. In this post, I’ll address another issue that I commonly encounter in my practice: illegible forms full of fine print that deprive consumers of fundamental rights.
What provoked this topic is a lawsuit I am currently handling. My client sued a payday lender based on a payday loan that she alleges the defendant repeatedly processed and renewed in violation of the payday lending laws of Missouri. This is a big deal to my client and to all of the numerous potential class members of this class action. Why is it important? For starters, this particular payday lender (and many others) charged 469% interest. This is not a typo. I have often asked friends and acquaintances whether they’ve heard of payday loans. They usually say they have heard of those sorts of businesses. I then ask them how much interest they think payday lenders charge. Most people say something like this:
“Oh, I hear that it is an exorbitant rate of interest, perhaps 25%.”
They are shocked to hear that it is legal to charge consumers 400 or 500% interest on a small consumer loans. They are shocked to hear that some of these companies make it part of their business plan to repeatedly violate Missouri lending laws. They are also shocked at one other thing, the topic of this post. They are shocked to see how unreadable and one-sided many business forms have become.
I should mention that the above lawsuit is not about the exhorbitant rate of interest, which is entirely legal. How can that be? See here. [1] The suit concerns allegations that the lender violated numerous laws concerning renewals and paydown of the loans.
Take a look at the actual form here: arbitration agreement.pdf [2] If you make it all the way through the form, send me a comment and I’ll publish it so that you get full credit for your diligence.
The above form is an arbitration clause that is printed on the back side of every loan application by one of the businesses that I have sued. This arbitration form is very much like the forms used by numerous other payday lenders and numerous other providers of goods and services to consumers from coast to coast. The above form runs more than 1400 words. All of those words are jammed onto one page in tiny type (about eight point), with fully justified margins running the width of the page (this makes it difficult to find where the next line begins). The title of this all-important arbitration provision does not even mention “arbitration.” The lines of this form are less-than-single-spaced to the extent that the lower strokes of a line actually touch the upper strokes of the letters on the line beneath it.
This form is so badly congested that I scanned the form at 400 dpi, then ran OCR (optical character recognition) on it using two separate programs (OmniPage Pro 14 and Adobe Acrobat Standard). Both of these programs failed pathetically, because the words and sentences are jammed together too closely for a machine to distinguish between the words and lines. If a person were to reformat the above form to double-spacing with one-inch margins, the form would take almost 7 sheets of paper.
This printed information on the above form is so absolutely unreadable that the corporate representative of the company that implemented this form stumbled several times while trying to read it at a deposition. It is written so poorly that a lawyer who works for the company could not explain a key provision of this arbitration clause immediately after being asked to read it.
My client’s readability expert explained that this form was not readable, based upon an analysis he conducted. It could not comfortably be read by anyone with less than a first-year graduate school level of training, he testified. Further, the form was not legible, based upon the appearance of the words on the page. Only a tiny sliver of consumers in America could be expected to make any sense out of this form. If you’d like to know more about the sorts of things that readability experts consider, check out this article [3] or this one [4], for starters.
My client has also presented several consumer attorneys for depositions in this case. Each of these expert attorneys stated that they had vast experience reviewing similar paperwork with their clients. Each of them stated emphatically that no consumers ever actually read anything like the above form. They described the form as “impenetrable.” Normal people simply don’t read forms written like this.
Despite all this evidence that no one will actually read forms like this, the above form purports to deprive consumers of the right to a jury trial. The above form also deprives consumers of a right to file a class-action against the business for widespread wrongdoing (this also deprives potential class members of the right to be a class member where the defendant corporation engages in widespread illegal activity). These are fundamental rights that are being taken away from consumers based upon forms that are neither legible nor readable. It would not matter what you put in the middle of this form, because no consumer is going to get to the middle of the form.
You could put in a sentence advising the consumer that all they have to do is stand up and say “give me $100” and the business would hand the consumer $100. But no one would ever notice that part of this contract, because no one would ever get through the first couple of sentences, much less the first paragraph (which, by the way, contains a single sentence of more than 250 words). This illegible form requires that consumers address their grievances with this company one by one, in individual arbitration. This, despite the fact that the case is based upon Missouri statutes so complicated that no consumer would ever realize that their rights have been violated (and therefore would never think of pursuing an arbitration).
In order to pursue this case individually (whether in arbitration or in a court), consumers would need attorneys. According to the attorney experts, however, there are only a handful of attorneys in Missouri who have shown any willingness to take consumer cases and none of them would be a will to make any profit at all on very small claims like these (typically less than $1000 of damages). In fact, the clear testimony is that an attorney handling these small risky claims would lose money every time, even if they prevailed in court.
What is fascinating, then, is that this form and thousands of other forms used in commerce are absolutely illegible and unreadable. The consumers do not read them and cannot read them. It does not matter what is put into the middle of these forms, because no one is ever going to get there. Not even the employees or the upper management of these companies read or understand these forms. These forms are typically written in a different language, legalese. In the case I am handling, the corporate representative could think of many rights to consumer gave up by signing the form, but couldn’t think of any rights the payday lending company gave up. The above form stripped the customers of valuable legal rights and left the business unscathed.
Nonetheless, millions of consumers are being deprived of their rights every day based upon legal forms like these, forms that simply cannot be read. The consumers sign them simply because they are told to sign them by smiling workers employed by corporate behemoths. People sign these forms because they are tricked into trusting the people who tell them to sign these forms. Ironically, the signature line at the bottom of most of these fine print forms requires consumers to declare that they have “read and understood” forms that they have neither read nor understood. Those sign them, of course, because they’re told to sign them and they make the mistake of trusting businesses that are often unscrupulous.
Thus, business as usual is based upon a huge fiction. Businesses and courts often assume that corporations have somehow communicated with their customers using unreadable forms. The evidence is clear, however, that only one out of a thousand people will ever try to work his or her way through this sort of form. Even fewer will succeed in understanding the form. Before you scoff at all those people who don’t fully read in their payday loan contracts, think of this. This same sort of trusting ignorance is the same thing that happens when you install new software. You are asked to check a box that you have read and understood the software disclaimers. It is highly likely that you (like most people) simply checked the box and get on with the installation without ever attempting to read or understand any of those disclaimers.
When it comes to fine print, expediency trumps truth. It is expedient to believe (at least in courtrooms) that everyone can read and does read such gibberish.
But this common legal finding has no basis in fact. Unless you have a dedicated lawyer willing to put up a huge fight, a court in which you might someday find yourself might tell you that you were supposed to have read and understood legal boilerplate which was neither readable nor understandable. Case closed.
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