Are Government Consumer Protections Laws Enough?

Simply put, no! We don’t believe that governments are capable of protecting consumers in the way that a fairly negotiated contract can.

First of all, governments are not always disposed to consumer protection. Consider the Federal Arbitration Act, which generally upholds mandatory arbitration clauses and even restricts states from enacting protections against their enforcement.

Second, one of the more common ways that governments act to protect consumers is to merely require disclosure of certain abusive terms. Disclosure is ok. It is better than allowing abusive terms to be hidden in fine print with complicated legal terminology in a lengthy document. However, these abusive terms may still be generally enforceable. If all companies in an industry adopt the required disclosures, the consumer is still left without a choice.

Finally, even if a government declares a certain contract term unenforceable, it does not necessarily prevent a company from including that term in a contract. A court may simply throw out the abusive term and consider the contract as if it were not there. However, a consumer who is not aware that the term is unenforceable may still decide not to pursue a potentially expensive legal remedy believing that the abusive term is enforceable.