Ben-Shahar Argues 'Less' is More in Consumer Protection Law

Professor argues 'less' is more in consumer protection law
Amelia Flood
Madison-St. Clair Record
September 6, 2009

In his years of studying mandates on product disclosures and other parts of consumer protection law, Omri Ben-Shahar has come to realize one thing.

"It's pointless," he said.

Ben-Shahar, who spent last summer studying all the mandated disclosure statutes in Illinois, Michigan and California, argues that consumer protection advocates have gotten it wrong when it comes to mandating information access for consumers. He says consumers get lost in a sea of technical language, unread disclaimers and long-shot lawsuits.

Ben-Shahar received his Ph.D. in economics and S.J.D from Harvard, and teaches consumer protection and insurance law at the University of Chicago Law School.

"Is this what we want to give them?" Ben-Shahar asks. "An 'I agree to something I don't even read?' I'm suggesting that if we want to take consumer rights seriously, in that we may be barking up the wrong tree."

Ben-Shahar outlined his proposals in a speech to students at the University of Chicago's Law School in February. He spoke with the Madison County Record June 9 about that speech and the "myths" of consumer protection.

The professor believes that while disclaimers and terms of service should be readily available to consumers, it should be their choice to read them. Companies should have the option of posting the conditions without being forced to highlight them. Most disclaimers, Ben-Shahar says, would be unnecessary if courts would take a step back and allow arbitration clauses to handle most consumer disputes.

The trend in consumer protection law, however, has been to require more disclosures and to allow for greater access to civil courts for consumers with complaints, he said.

According to Ben-Shahar, disclosures are of more use to consumer ratings groups like Zagat and Consumer's Digest than they are to most consumers. Disclosures include overly technical language and required wording which most people don't take the time to even look through, he said.

"The majority of consumers would not be able to get anything from it," he said.

While some companies -- particularly online giants like Google and eBay -- have tried to make their terms of service and disclosures more readable, legally they can only innovate so far, Ben-Shahar said. He sees that as a stumbling block for helping consumers make informed choices. It also burdens companies and can drive up costs.

Court decisions are also having an impact on consumer law, Ben-Shahar said.

The U.S. Supreme Court recently allowed consumers greater access to the courts when it ruled that plaintiffs could pursue cases against products governed by federal labeling rules in state courts.

Riegel v. Medtronic Inc. was decided in January. While he thinks the case will have more impact on personal injury law than consumer protection, Ben-Shahar says it points to the need for courts to step back.

"That door that the Court opened will allow more people to walk through," he said.

More lawsuits could clog already heavy dockets like those found in Madison and St. Clair counties. Both are notorious nationally for their heavy lawsuit loads.

In Ben-Shahar's view, increasing the number of lawsuits won't help most consumers who have small to medium award cases at best.

He favors arbitration clauses, where disputes are settled between the consumer and company before reaching court. This language, often found in boilerplates, require arbitration, something courts can be hostile to, he said.

Courts should be dealing with systemic problems and blatant fraud, he said.

But, in his view, they are expanding that definition.

"I think the courts tend to consider other types of behavior as quasi-fraudulent that aren't," he said. "Unsophisticated consumers can find more relief in arbitration than in litigation."

Ben-Shahar argues that if the system were to make information available without mandating it, consumers would become more independent. Autonomous consumers could then hold companies making bad products to higher standards than legal means because they would take their dollars to other companies making better products. In the continuing poor economy, this could be a powerful factor, he says.

"I'm not sure that there's anything better than that," Ben Shahar said.

Copyright 2009 Madison-St. Clair Record

Faculty: 
Omri Ben-Shahar