Corporations Are Stripping Americans’ Legal Rights As Congress Deregulates
On October 27th, 2017, the Starbucks Corporation changed its Terms of Use policy for its customers in the United States. Under the Terms of Use, by using any Starbucks services, you automatically forfeit your right to class-action lawsuits and consolidated proceedings.
By simply using any of their services, customers of the coffee chain instantly forfeit their right to participate in any court action that involves any more than a single plaintiff, i.e., themselves.
“These terms include an Arbitration provision that governs any disputes between you and us. Unless you opt out, as described below, this provision will:
- “Eliminate your right to a trial by jury; and
- “Substantially affect your rights, including preventing you from bringing, joining or participating in class or consolidated proceedings.”
If you’ve not used a Starbucks Wi-Fi hotspot, website, or any internet-based service since the company’s Terms of Use were updated, then you have nothing to worry about. All you’ll need to do is make sure never to connect to their Wi-Fi or use any of their online services again. Easy, right?
For many, it won’t be.
A US enterprise, Starbucks has over 25,000 store locations around the world, with each one serving well over 500 customers every day on average. Half of these stores are situated within the United States.
In 2013, Starbucks claimed that 7.5 million purchases were made every week via the Starbucks App, accounting for 90 percent of all mobile transactions in the US. At the time, Starbucks’ mobile wallet accounted for nearly 16 percent of all the company’s business, and it’s inevitable that in four years that number has gone way up.
The only way you may ever pursue a claim in court against the company in the future is if you send the company a written notice.
“… you may choose to pursue your claim in court and not by arbitration if you opt out of this arbitration provision within 30 days from the earliest of the date you downloaded, installed, accessed or used the Sites (the “Opt Out Deadline”) after these Terms have gone into effect.”
According to Starbucks, “[a]ny opt-out received after the Opt Out Deadline will not be valid and you must pursue your claim in arbitration or small claims court.”
This means, for the millions of consumers that use Starbucks Mobile Wallet for example, if the company gets breached and exposes your information to hackers who then steal your phone number, credit card information, name, address, or anything else, you will never be able to join a class-action lawsuit or consolidated proceeding against the company for reparations.
Instead, you will have to do it individually, through forced arbitration instead of in court, and you will have little power against the massive corporation.
Class-action lawsuits are often the only way for individuals with little legal recourse to fight back against large corporations that they have a legal dispute with. Without the ability to consolidate their legal power against massive corporations, individuals very quickly find themselves alone, up against companies that hold extreme jurisdiction and access to resources.
So why is this happening?
Equifax, one of the United States’ three major credit reporting firms, experienced a massive data breach that left 143 million Americans with their sensitive information exposed, including names, social security numbers, birth dates, addresses, and other identifying data.
After waiting months to disclose the breach, the company set up a new website for consumers to check if their information was exposed, offering new credit protection and monitoring on the site. After looking into it, journalists discovered that by signing up for the service, consumers automatically waived their right to litigation, instead submitting to forced arbitration. Like the financial institutions before them, Equifax cleverly protected themselves from effective lawsuits by crippling the consumer’s ability to band together with one another, forcing them to each make their claim with the company — in private, one on one — with little-to-no power.
On Tuesday, three days before the legal team at Starbucks finalized their new Terms of Use policy, Senate Republicans voted to strike down a new rule that would have allowed millions of Americans to join together in class-action lawsuits when engaged in a dispute with financial institutions. As the law stands right now, financial institutions are still able to force clients into forced-arbitration clauses when creating bank accounts, taking out loans, signing up for credit cards, and more.
The Vice-President had to break the tie in the Senate, making the vote a stunning 51-to-50, despite the fact that a poll in July indicated two-thirds of the American public supported the rule.
“Tonight’s vote is a giant setback for every consumer in this country. As a result, companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers.”
— Richard Cordray, CFPB Director
The new rule has been in the making for the past five years by the Consumer Financial Protection Bureau — the watchdog agency created as part of Dodd-Frank — implemented to prevent a repeat of the 2008 financial crisis.
Starbucks seemingly realised that a very similar policy to could significantly bolster their ability to fight off angry consumers in the event of a mistake, like for example, a breach in financial information. Now, the millions of American customers of the Starbucks corporation who use the company’s Mobile Wallet and Starbucks Card are without rights to class and consolidated proceedings.
There is mounting evidence that Congress has not been voting with their constituents in mind. In April Congress killed American internet privacy protections, a motion that a vast majority of Americans were not in favour of.
All this deregulation leaves consumers in the United States more vulnerable and without legal recourse when something goes wrong.
The last time a Republican government deregulated throughout its time in power, it ended in a financial crisis. Somewhere, Nero is playing his fiddle.
UPDATE: Upon further research, the terms of service for all internet properties owned by the Cable News Network, Inc. are now updated to include a clause extremely similar to that of Starbucks. CNN, the ‘most trusted name in news,’ has joined the list of corporations using legal loopholes to prevent class litigation in the event Americans take issue with their practices.
“[The terms of service apply to] current and future online and mobile websites, platforms, services, applications, and networks owned or operated by CNN, including without limitation, CNN.com, CNNMoney.com, HLNtv.com, CNNI.com (edition.cnn.com) and cnnespanol.com, and/or for which CNN currently or in the future provides services and/or technology (the “Site” or “Sites”).”
The Terms of Service are used in conjunction with CNN’s Privacy Policy, a policy that shares information with 30 other affiliates, as well as Time Warner, Inc.; Warner Bros, Inc.; and Home Box Office, Inc. (or HBO). All of your information that is collected by any of these companies can be shared in between any and all of their affiliates and parent companies. More importantly, it should be noted that Time Warner, Inc. owns all of these entities, and has influence and control over their activities.
Home Box Office, Inc., as well as every other corporation owned by Time Warner, Inc., has implemented Terms of Use identical or similar to those of CNN’s and Starbucks.
For any American readers, the only way to protect your information is by always reading the Terms of Service for every large entity you interact with, and if you’ve been hit by the Equifax data breach, freezing your credit.
For international readers, a way to protect your information would be to limit your interaction with corporations that are based in or store data in the United States. Always read the terms of service and privacy policy. Otherwise, a good practice would be to regularly let your representatives in government know that regulation preventing similar circumstances to those in the US is important to you as a constituent.
