As published in the Wall Street Journal this week, it's estimated that, on average, each household in America loses approximately two thousand dollars each year on fees, scams and waivers they weren't aware of because they didn't read contracts connected with services or products rendered. That amounts to 250 billion dollars across America. Google "BBB read the fine print," the results may surprise you.
Better Business Bureaus (BBBs) Recommend Reading the Fine Print
Here are a few of thousands of suggestions the Better Business Bureaus around the country have made after receiving numerous complaints that could have been avoided if only the consumer had read the fine print.
- The Connecticut BBB: In 2011, received 1,300 complaints regarding scam cruise ship scam offers. With the cruise ship season upon us, they warn that fraudulent companies send post cards, letters and advertising packets offering great deals or free cruises.
- The St. Louis, Missouri BBB: Recommends using caution when purchasing gift cards. There may be an expiry date, additional fees, or if the person receiving the gift card wants to make an online purchase, this may not be possible.
- A Charlotte, North Caroline BBB: Warns that over the last thirty-six months, they have received four hundred and eleven complaints, regarding gym memberships. Most of the complaints were because a salesperson promised one thing, while the contract stated something different.
Newspapers Regularly Advise Readers to Read Agreements
- Odessa America, a newspaper serving West Texas and Eastern New Mexico, published a cautionary tale regarding internet deals, such as Groupon and Living Social, the article urges readers to read the fine print because there may be details that aren't obvious.
- An article in The Lorado Sun titled "Resolve to be a Smart Shopper in 2012 listed ten resolutions. Resolution number three was, always read the fine print.
- The Toronto News published an article regarding ten things you need to know before signing on the dotted line, number four was to read the contract and pay attention to the details.
This is all very well, but there are very good reasons why most of us shudder at the thought of reading the thousand or more contracts we will be asked to sign during our life time. They can be many pages long, full of legalese and printed in small type. Besides, they are mostly boilerplate contracts, and nothing within the contract can be changed.
The Informed Minority
In August 2009, The Net Institute published the results of an extensive study The purpose of the study was to quantify the informed minority.
It is rationalized that in competitive markets a minority will read the terms of a boilerplate, and that is enough to keep disciplined sellers from offering unfavorable terms. The hypothesis is that if the seller loses informed minority purchasers because of unsuitable terms, the loss would outweigh profits gained by taking advantage of the majority who are not reading the contract.
The Net Institute concluded that the informed minority in their study was so insignificant that the argument against regulation because of the informed minority holds no water. Also, courts tend to side in favor of the seller, striking down buyer cases unless its found that the terms are "substantially and procedurally unconscionable."
The Wall Street Journal story reported that a recent iphone contract was thirty-two pages long with margins 1/8 of an inch and character height of 4.5 points, which is a "smidgen taller than the thickness of a single dime." Making the contract even more it difficult to read was the liberal use of capitalization. The article also mentioned that the median length of bank disclosure documents for a checking account is one hundred and eleven pages.
Regulators are insisting on greater transparency. Businesses want to protect themselves from being sued. This has resulted in wordier and wordier contracts, full of legalese, and printed with typeface almost impossible to read. Since it's the consumer who pays the price, it's the consumer who must lobby for fair contracts.
Sources:
Wall Street Journal - It’s not your eyes - the fine print is getting really, really small
St. Louis BBB Advises Shoppers to Watch Out for Fee Tampering When Buying Gitf Cards
South Piedmont Charlotte NC Joining a Gym in the New Year? Resolve to Get Fit without Getting Taken
Odessa America - BBB - Internet deals sometimes lead to frustration
Laredo Sun - Resolve to be a smarter shopper in 2012
Toronto News - Before You Sign on the Dotted Line - Ten Things You Need to Know
Social Science Research Network - Does Anyone Read the Fine Print
Fair Contracts - Consumers Take Action
Oreen Scott - After twenty-two years in the newspaper business, three years ago Oreen sold her house, car and almost everything she owned. A Canadian by ...
