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General Mills announced over the weekend that "due to concerns that its plans to require consumers to agree to informal negotiation or arbitration had raised among the public, it was taking down the new terms it had posted on its website," the New York Times reports.

Last week, as written about here on MNB, General Mills posted new language on its website saying that any customer who downloaded its coupons, "liked" it on Facebook, entered a company-sponsored contest or even bought its products would be voluntarily giving up the right to sue General Mills, and instead would have to go to binding arbitration to resolve any legal dispute with the manufacturer.

In the new blog posting, General Mills says:

"We’ve listened – and we’re changing our legal terms back

"As has been widely reported, General Mills recently posted a revised set of Legal Terms on our websites. Those terms – and our intentions – were widely misread, causing concern among consumers.

"So we’ve listened – and we’re changing them back to what they were before.

"We rarely have disputes with consumers – and arbitration would have simply streamlined how complaints are handled. Many companies do the same, and we felt it would be helpful.

"But consumers didn’t like it.

"So we’ve reverted back to our prior terms. There’s no mention of arbitration, and the arbitration provisions we had posted were never enforced. Nor will they be. We stipulate for all purposes that our recent Legal Terms have been terminated, that the arbitration provisions are void, and that they are not, and never have been, of any legal effect.

"That last bit is from our lawyers.

"We’ll just add that we never imagined this reaction. Similar terms are common in all sorts of consumer contracts, and arbitration clauses don’t cause anyone to waive a valid legal claim. They only specify a cost-effective means of resolving such matters. At no time was anyone ever precluded from suing us by purchasing one of our products at a store or liking one of our Facebook pages. That was either a mischaracterization – or just very misunderstood.

"Not that any of that matters now.

"On behalf of our company and our brands, we would also like to apologize. We’re sorry we even started down this path. And we do hope you’ll accept our apology. We also hope that you’ll continue to download product coupons, talk to us on social media, or look for recipes on our websites."
KC's View:
Last Thursday, commenting on the Times story about the new policy, I wrote, in part:

Wow. That's a pretty nifty legal argument - simply by doing business with us, you give up your right to sue … I guess what I don't know is whether such an approach by General Mills could have a chilling affect on its business, or at least its reputation. Because in essence, the company that just a few weeks ago said that it would eliminate GMOs from its Cheerios flagship brand - appearing for the moment to be on the side of the angels - now is saying that even if it violates that promise, consumers' options are limited. Which, to my mind, makes the promise just a little less impressive.

I guess I got my answer to that - General Mills apparently was concerned that public perceptions would, in fact, have a chilling effect on business. Good for them seeing the problem and moving quickly to fix it.

I got several emails about this commentary suggesting that I was being too anti-arbitration, and that as an alternative to long and costly lawsuits, binding arbitration actually can be an effective and fair method of achieving some measure of justice.

Which is a fair criticism of what I wrote. I should've been a little more careful with my words, because I actually agree with that last sentiment. I've been involved in a lawsuit or two and have been threatened with others (like by former business partners who got annoyed when I launched MNB). It's true - lawsuits can be expensive, and arbitration can be a far better option. Lawyers often are the only ones who benefit from such activity.

I think what a number of us were reacting to was the apparent presumptive elimination of alternatives, which seemed anti-consumer. Even more important, I was thinking not about General Mills, but about far less reputable companies that could use such an approach to protect themselves from lawsuits that deserve to be filed.

The broad lesson here, I think, is that any policy perceived as not being in the best interests of the consumer probably is a bad policy. Consumers have the power to an extent they never have before - not just purchase power (which they've always had) but also the power to shape and mobilize public opinion. Mess with that at your own risk.