Opaque (formerly Dark) Patterns and Arbitration Opt Outs

Dark Patterns (I prefer calling them Opaque Patterns) have been drawing a lot of attention from consumer protection regulators in recent years. For those who are unclear on what they are, the FTC has defined them as “practices that trick or manipulate users into making choices they would not otherwise have made and that may cause harm.” Though the phrase is often used to describe online practices, there is no reason to confine it to online conduct, and indeed opaque patterns existed long before the Internet in one form or another.

That brings me to arbitration opt-outs. Some contracts create the illusion of consent to arbitration clauses by including a term allowing consumers to opt out within a specified time by writing to the company. For example, Citibank’s credit card agreement, American Airlines AAdvantage Mileup Card Member Agreement, gives cardholders 45 days to write a letter to Citibank opting out of arbitration. According to the CFPB Arbitration Study, more than a quarter of credit card arbitration contracts included opt-out provisions. While little data is publicly available about how many consumers avail themselves of such opt-outs (the only data I have seen is that in one case, the parties proposed findings of fact indicated that only 0.1% of cardholders had opted out., See Parties’ Proposed Findings of Face and Conclusions of Law, Ross v. Bank of Am., 524 F.3d 217 (2d Cir. 2008), No. 05-cv-07116) the likelihood is that very few have, for multiple reasons, as we discussed in our Whimsy Little Contracts article.

First, few consumers read contracts. Second, if consumers do glance at them, they are unlikely to read far enough to see the right to opt-out. As an example, the right to opt-out appears on the ninth page of the Citibank contract linked to above. Third, if they do read the opt-out provision, they may not understand it. Fourth, if consumers do understand the meaning of the text explaining their right to opt out, consumer ignorance of arbitration’s consequences makes it unlikely that consumers will see any reason to trouble themselves to draft and mail a letter opting out. Fifth, any consumers who do understand that by opting out they could preserve their right to join a class action, and why they might want to do that, will likely also know that so few other consumers will opt out that a class action will still not be feasible. Thus, opt-out options create the appearance of consent but not the reality.

But let’s assume a consumer gets past all that. How easy is it to opt out? The answer is not very. Because the industry does not want consumers to opt out of arbitration, it has an incentive to make it difficult for consumers to do so. If you lose your credit card, you can call the issuer and tell them. But that’s not how it works with opt-outs. Opt-out provisions have been known to include statements that the company will not accept opt outs “sent by electronic mail or communicated orally,” See JPMorgan Chase Bank, NA, Amazon Visa Signature Agreement 18, available at https://www.consumerfinance.gov/credit-cards/agreements/issuer/jpmorgan-chase-bank-national-association/ but only by Postal Service mail sent to a specified address, suggesting that the company is strewing roadblocks in the path of consumers trying to opt out, in an attempt to increase their transaction costs and prevent them from opting out, a type of opaque pattern. And consumers have to draft the letters themselves. I have never seen one of these opt-out terms that was accompanied by a form the consumer could use. The industry is using opaque patterns to make it harder for consumers to escape arbitration clauses. Not exactly a surprise.