Visual Consumer Contracts

This week the New York Times’s DealBook featured a three-part series about arbitration clauses called “Beware the Fine Print.” Part I begins: “On Page 5 of a credit card contract used by American Express, beneath an explainer on interest rates and late fees, past the details about annual membership, is a clause that most customers probably miss. If cardholders have a problem with their account, American Express explains, the company ‘may elect to resolve any claim by individual arbitration.’ ... By inserting individual arbitration clauses into a soaring number of consumer and employment contracts, companies like American Express devised a way to circumvent the courts and bar people from joining together in class-action lawsuits, realistically the only tool citizens have to fight illegal or deceitful business practices.” 

As I read the article I thought to myself, “Yes! Most contracts are written in impenetrable legalese and they’re badly formatted, which discourages people from reading them. And what’s the point? It's not like consumers have any power to negotiate the terms of the contract anyway.” 

I decided to pull up my own AmEx cardholder agreement to see just how bad it really was. But to my surprise, I was wrong on all three counts. The agreement is written in relatively plain language, the formatting isn’t horrible, and it actually gives consumers 45 days to opt out of the arbitration clause:

But the reality is that most people don’t opt out. Either because they didn’t read the agreement in the first place, or they gave up before getting to the Claims Resolution section, or they didn’t understand the significance of the arbitration clause. 

Opt-out provisions aren’t very meaningful if nobody knows that they’re there. We can do better. Indeed, the Consumer Financial Protection Bureau is already in the process of developing a “shorter, simpler credit card agreement that spells out the terms for the consumer.”

While making cardholder agreements shorter and simpler is a laudable goal, I don’t think it’s enough. We need something to grab the consumer’s attention and let her know that there is a decision to be made—that at least she has a choice about the arbitration clause. 

For example, we could develop a “decision” icon that could be included on the front page of any consumer contract that has an opt-out provision. Perhaps something along the lines of:


This icon would signal to the consumer that there is actually some value in taking time to read the agreement because there is a decision to be made about its contents.

Helena Haapio has written extensively on the topic of contract visualization and has advocated for the development of a “standardized  ‘vocabulary’ of contracts graphics to accompany or alert the reader to typical default rules and legal regulation,”  which she argues would have both social and commercial value. 

A great starting place might be for regulatory agencies such as the CFPB to begin including such graphics in their model forms.