Is It Time to Get Rid of Fine Print?

The devil is in the details. In the modern world, that’s more true than ever. No one can realistically hope to keep track of or understand all the legal and contractual obligations they incur in the course of their daily lives. There’s simply too much fine print.

So why don’t we just get rid of all that fine print? Harvard Law Professor Elizabeth Warren, who specializes in contract law—and who also heads the congressional panel charged with providing oversight for the bank bailout program—says we should do exactly that. As Warren says in a Washington Post feature on things we could do without, “Contract law is based on the idea that two people can come together and strike a deal, knowing that the courts will enforce their agreement if something goes wrong.” But for the most part consumers have no idea the contracts and end-user license agreements they sign actually say. You would have to be an expert in contract law yourself to understand half of what goes into them.

The truth is that if we actually had to read and understand the terms of every transaction, we wouldn’t go through with half of them. The iTunes Store’s “Terms and Conditions,” for example, run to 30 pages of tiny type printed out. It’s hard to imagine that many of us would ever buy music online if—in addition to shelling out $1.29 a song—we actually had to read and understand the service agreement every time. Rather than actually wade through this stuff, we typically go through the farce of certifying we’ve read the terms and actually agreed to them. And if we want to use software or a credit card, we simply have to trust that nothing too unreasonable has been slipped into the service agreement.

As a legal matter, it’s not clear how much these agreements are enforceable. If Apple were to covertly insert a clause into the iTunes service agreement requiring users to sign their houses over to the company, no court would be likely to require users to actually give up their homes. But these agreements do more than just provide companies with a fig leaf of protection against legal liability. As Warren points out, they allow big corporations with their large legal departments to set out terms their customers can’t easily understand. And, as she says, these agreements are typically written in a way that allows companies to “do almost anything—raise prices, cut service, extend the contract—all because the fine print says so.”

Companies in competitive markets may be wary of invoking some of the rights they reserve for themselves in the fine print for fear of driving customers away. But businesses that know their customers have little choice—like cable providers, phone companies, or credit card companies—often do change the terms of these agreements and raise their rates with little warning. And all this fine print costs us in ways that go beyond what it costs to print the millions of pages of service agreements no one reads. As Warren says, the fine print makes it difficult to compare the products and services companies offer, which makes markets less competitive and the economy less efficient. Banning fine print in a way that protects both consumers and corporations might be tricky. But maybe is Warren is right when she says, “If you can’t explain something in simple, straightforward terms, it shouldn’t be part of the agreement.”