Thursday, December 22, 2011

The Fine Print Society

As I go over all the bills and statements and announcements and changes to this or that plan or arrangement or contract that have flooded into my mailbox recently, it occurs to me that this is a form of concerted action. Corporate managers have collectively determined to overwhelm us with fine print. We can't possibly read all this crap, much less meditate like some 18th century aristocrat on the implications of the content. Yet we can't do so much as download an update to Adobe Acrobat without "signing" a contract. We are conclusively presumed to have read, understood, and agreed to every lawyer-drafted word, and yet everybody knows that none of us reads this. Not even Ron Paul--so don't start with me. And the more of these contracts we get, the less likely it is that we will read any of them. So corporations have an incentive to send more of them and make them longer and more verbose. This is a collective decision on their part, and it is working, and they know it.

Nearly all of this stuff is enforceable, as many an HOA or condo unit owner has discovered, and it makes citizens relatively powerless. The private logic of contact law structures the relationship as individual consumer vs. big corporation with government as the enforcer of the contract, instead of citizens vs. powerful private organizations, with government as policy maker holding jurisdiction over the relationship.

The law calls these boilerplate documents "contracts of adhesion," but the days are long past when judges were willing to throw them out because they were drafted by one party and imposed on the other, there was gross inequality of bargaining power, and there was no real assent to the terms. Now they are deemed essential to the free flow of modern commerce.

My view has always been that policy makers should be willing to step in and reform these relationships if they become predatory or destructive. But there is little stomach for that presently.


Fred Fischer said...

Presently their is no other private or public organization that affects so many people and qualifies more as being predatory and destructive as housing/condo associations. The proof is found in the poorly authored contracts that contain too much ambiguous and arbitrary language and unnecessary CC&Rs which don’t represent the best interests of buyers. This creates a monopoly that encourages and rewards corruption while stripping its members of constitutional and other rights and reasonable ways to defend themselves.

Evan was right when he recently said “they have discovered how much $$$ there is in abusing your authority by creating all sorts of absurd rules and then soaking people with fines for violating them. The police power becomes a revenue source. The same thing happened when cities discovered that mandating HOA and condo development was lucrative, which amounts to misusing the power to control land use and turning it into a revenue source instead of thinking about how best to develop the area under their jurisdiction….” Sadly this is the consequence of public-private partnerships when applied to housing which blurs what otherwise should be a clear distinction between public and private. Because property rights are the foundation of so many of our other rights and freedoms which this partnership ends in so many ways.

Finally for those who doubt just read DR. Gary Solomon’s study on HOA Syndrome and still claim that privatized housing governance should continue to be supported and spread !!!!

Anonymous said...

"The private logic of contact law" should be "The private logic of contract law" in the second paragraph. Otherwise...

This is an excellent post illustrating one of the reasons why the conservative and libertarian disciples of Ayn Rand who preach the gospel of capitalism and free-markets are as ignorant of the real-world consequences of their ideology as your typical college campus leftist wearing a Che Guevara t-shirt driving around in a Prius sporting a "Hope and Change" bumper sticker.

It also ties in well with a phrase you coined back in 2008

"'repressive libertarianism,' where certain people who call themselves libertarians invariably side with property owners who want to limit other people's liberties through the use of contract law. Property rights (usually held by somebody with a whole lot of economic clout) trump every other liberty...As private corporations take over more functions of government, this position could lead to gradual elimination of constitutional liberties."

and a law review article about "Terms of Use"

"Ten years ago, courts required affirmative evidence of agreement to form a contract...Today, by contrast, it seems widely (though not universally) accepted that if you write a document and call it a contract, courts will enforce it as a contract even if no one agrees to it."

The Right To Own Your Own Home said...

On June 12, 2010 -- about two weeks after conservative media outlets ignored the Michael Clauer story, the libertarian blog reported that

Pam Geller may sue PayPal for calling her blog a "hate site."
source: (June 12, 2010 at 11:34 PM)

Ms. Geller is the editor of a web site called "Atlas Shrugs". After PayPal suspended her account, she solicited funds for "another lawsuit. Want to make a contribution to my fight?" (Pam Geller. "PayPal Cuts Off Atlas: Truth Is The New Hate Speech" June 12, 2010).

The irony of an Ayn Randian threatening to litigate against a private corporation for a claim of discrimination was lost in the conservative/libertarian blogosphere.

If she, or any of her supporters, had bothered to read her adhesion contract with PayPal -- which is 19,007 words long (276 paragraphs, in 30 pages) -- she would have been aware that PayPal had the right to terminate her account at any time for any reason.

V. Rights, Obligations and Disclaimers of PayPal
4. Termination. PayPal, in its sole discretion, reserves the right to terminate this Agreement,
access to its website, or access to the Service for any reason and at any time upon notice to you
and payment to you of any unrestricted funds held in custody for you.
source: PayPal. "User Agreement For PayPal Service"

But apparently, Ms. Geller's supporters believe that she has more of a "right" to use PayPal's services than everyone else does to, say, health care; or to own their own home. Even the folks at could not be bothered to inform their readers about Pam Geller's threat of a frivolous and baseless law suit against a private corporation that had not violated its contract with her.

However, there was enough publicity on Ms. Geller's behalf that her account was re-activated within one business day.

On Monday, after what Geller says was a storm of protest, PayPal backed down.
Geller said she received a phone call from PayPal early Monday morning informing her it had all been a “misunderstanding.”
“They called me back and said it was a misunderstanding and we’re all good,” Geller said. “They obviously received an overwhelming response.”
“I have a pretty big soap box, but what are the little guys supposed to do?”

source: "PayPal Relents and Apologizes to Pamela Gelller" PajamasMedia. June 15, 2010.


To this day, Pam Geller has "relevance" among conservatives and libertarians ( on July 29, 2011 at 8:21 pm), while U.S. Army Captain Michael Clauer -- who had his house stolen by his H.O.A. for the benefit of corporate lawyers while he was deployed to Iraq -- has none.

The Right To Own Your Own Home said...

Note: The above comment was written earlier this year, and originally published on my web site,

As a quantitative analysis of the relevance of Pam Geller vs. Michael Clauer among conservatives, see
About 28 results
Your search - "michael clauer" - did not match any documents.

Anonymous said...

This also ties in with something you posted a few months ago:

Friday, July 23, 2010
Credit Card Contracts Unreadable For Most Americans
Credit card contracts unreadable for 80% of Americans"Credit card contracts and other such documents are written in dense prose for a reason: So that the customer will NOT be able to understand it," notes Roy Peter Clark, a national expert on writing and a senior scholar at the Poynter Institute in St. Petersburg, Fla. "I may be cynical, but I don't think their writing strategies are accidental, the collateral damage of a bureaucratic mindset. I think those writers know exactly what they are doing."

And in the comments section to that blog post is a passage from Megan McArdle's "No Such Thing As A Simple Mortgage":

Actually going through the mortgage process is a reminder of one of the reasons that things went so badly wrong during the housing bubble; we are inundated with paper. There are disclosures about the Mortgage Disclosure Improvement Act telling us we have seven days to review any change in our APR; disclosures about the Home Valuation Code of Conduct, even a disclosure solemnly informing us that the bank intends to check credit scores and may not loan us money if there’s a bad payment history of too much debt.

I’m pretty good with paperwork, and I understand all the terms being used (not to mention the laws being referenced), and I find it impossible to keep track of it all mentally–especially when you add in the tax returns, the W-2s, the bank statements and sworn certifications that all the money being used was legitimately earned or received as gifts. In fairness, we’re going through our credit union, which is apparently especially bureaucratic, but still–it’s very easy to develop a sort of attentional blindness and keep signing things. I requires heroic effort to read every document.

This illustrates, I think, the limits of transparency. Much of this paperwork is the product of earlier acts designed to help uninformed borrowers deal with the complexity of their loans. If you read and understand all of it, perhaps you do. But there's so much of it that it's relatively easier to overlook something.

Ms. McArdle used to write under the pen-name Jane Galt, before becoming a business and economics writer for the Atlantic. According to her, all this complicated paperwork and unreadable contracts is the result of government regulations, not acts by virtuous corporations.

Anonymous said...

In chapter 9 of The Dilbert Future (1997), Scott Adams predicted that

In the future, all barriers to entry will go away and companies will be forced to form what I call "confusopolies."

Confusopoly: A group of companies with similar products who intentionally confuse customers instead of competing on price.
. . .
Several other industries are already dominated by confusopolies:

Existing Confusopolies:
- Telephone service.
- Insurance.
- Mortgage loans.
- Banking.
- Financial Services.

Those types of companies are natural confusopolies, because they offer products that would be indistinguishable to the customer except for the great care taken to make them confusing.

Anonymous said...

While browsing the book store last night, I came across a new book on this very topic.

Surprisingly, and disappointingly, a quick review of the index and table-of-contents suggests that this book says nothing of HOA adhesion so-called-"contracts".
The Fine Print: How Big Companies Use "Plain English" to Rob You Blind
by David Cay Johnston

Book Description
Release Date: September 18, 2012

“No other modern country gives corporations the unfettered
power found in America to gouge cus­tomers, shortchange
workers, and erect barriers to fair play. A big reason is
that so little of the news . . . addresses the private,
government-approved mechanisms by which price gouging is
employed to redistribute income upward.”

You are being systematically exploited by powerful
corporations every day. These companies squeeze their
trusting customers for every last cent, risk their retirement
funds, and endanger their lives. And they do it all legally.
How? It’s all in the fine print.

David Cay Johnston, the bestselling author of Per­fectly Legal
and Free Lunch, is famous for exposing the perfidies of our
biggest institutions. Now he turns his attention to the ways
huge corporations hide sneaky stipulations in just about every
contract, often with government permission.

Johnston has been known to whip out a utility bill and explain
line by line what all that mumbo jumbo actually means (and it
doesn’t mean anything good, unless you happen to be the
utility company). Within all that jargon, disclosed in
accordance with all legal requirements, lie the tools these
companies use to rob you blind. Even worse is what’s missing
— all the contractually binding clauses that companies hide
elsewhere yet still enforce and abuse. Consider, for example,

- An insurance company repeatedly delayed paying for a
paralyzed man’s vital care despite court orders to pay up.

- Laws in nineteen states let companies like Goldman Sachs,
General Electric, and Procter & Gamble pocket the state
income taxes withheld from their workers’ paychecks for up to
twenty-five years.

- A little-known government rule gives safety waiv­ers to deadly
industrial facilities secretly located underneath schools and

- The “FCC Charge” on your phone bill, which appears to be a
government fee, actually goes straight to the phone company.

Johnston shares solutions you can use to fight back against
the hundreds of obscure fees and taxes that line the pockets
of big corporations, and to help end these devious practices
once and for all.