Social Media as a Risk Management Tool?

I recently read an article titled “When ‘Liking’ a Brand Online Voids the Right to Sue,” written by Stephanie Strom of the New York Times, that reported an interesting change in the way manufacturers are dealing with consumers and using social media as a risk management tool. In the past I have written on this blog about consumers using social media and social networking sites to publicize their product liability claim or general dissatisfaction with a particular product. Now it appears manufacturers are turning the tables.

The article was prompted by a recent move by General Mills to modify the language of its legal terms on its website – requiring any dispute arising from the purchase or use of a General Mills product to be resolved through binding arbitration. By the time I had read the article on April 23, General Mills had already posted a recant of the arbitration clause on its blog and reinstated the prior legal terms on its home page – which did not contain any language binding consumers to arbitration.

According to the Times, customer interactions with General Mills – such as entering a company-sponsored sweepstakes, downloading a coupon or an act as simple as “liking” the company on certain social media sites – would bind the customer to the arbitration clause on the website, requiring any dispute with General Mills to be resolved through arbitration rather than conventional litigation. The change was characterized as a move with nefarious intentions – which is unfair in my view.

Arbitration is an efficient and cost-effective way to resolve disputes, and the preferred method for resolving disputes in the commercial arena. To say arbitration unfairly advantages companies over consumers is meritless and untrue. In fact, arbitration has been statistically shown to be more favorable for both parties involved. Without question, it resolves disputes considerably faster than the litigation process through the courts and is less expensive for both parties. According to a survey conducted by the ABA, 78% of a cross-section of trial attorneys who handle both plaintiff and defense matters believes that arbitration is generally timelier than litigation. Moreover, more than half of those attorneys surveyed felt arbitration was more cost-effective.

Expedience and cost are even more of a consideration when dealing with a small-dollar dispute between a company and a consumer. Arbitration in such disputes certainly levels the playing field, and if the consumer is successful at arbitration, chances are he or she will likely be able to keep more of the award and spend less on legal fees and expenses that typically arise from prosecuting a civil action through the courts. In fact, some court systems have mandatory arbitration for small matters to relieve heavy pressure on already overcrowded court dockets.

The efficiency and speed of arbitration is why scores of companies have made similar changes to the legal terms on their websites. Critics of this policy claim the move was simply to avoid class action lawsuits. However, most people who have had experience with class action lawsuits realize that they typically only benefit the attorneys involved, and the individual plaintiffs receive a small fraction of the overall award. In actuality, arbitration is not unfavorable to consumers; it is unfavorable to class-action plaintiffs’ attorneys.

From our perspective, it is important to discuss the option of arbitration with the client at the intake stage and before responding to any suit papers to avoid waiving the opportunity to arbitrate the dispute. Several bills have been proposed in Congress to eliminate arbitration from consumer disputes; however, none of them have been successful. Arbitration in product liability matters is becoming more prevalent and will likely be the preferred method for resolving disputes between consumers and manufacturers in the future. We are interested in hearing from our readers if anyone has litigated the issue of whether “liking” a brand on a social media site binds the user to the arbitration clause of a company’s website.

This blog post was published originally on May 1, 2014.