Posted by William Charles on November 22, 2017
Misc

Published on November 22nd, 2017 | by William Charles

43

Ask An Attorney: Agreeing to T’s & C’s Won’t Cost You Your Soul

Introduction

Welcome back for round 3 from Alex & Darr, The Points Attorneys. If you missed our first post, you can find it here. Our second post was on if the Chase 5/24 rule is legal or not. We are lawyers who help points-and-miles enthusiasts bring claims against banks related to the miles-and-points hobby. In these posts, we’re looking forward to answering your questions and providing some general tips to help DoC readers. If you want to add your questions to the list, chime in in the comments of this post. Alex also has a great series of posts on Frequent Miler called the Fine Print Series that I’d strongly recommend reading.

The following is not legal advice. It is written for educational purposes only. If you have a question or if you believe you have a complaint, submit an inquiry on bachuwalaw.com

The Question

If a company puts, “By signing up, you agree to sell your soul” and buries it in the fine print, is that enforceable? How legally binding are the T’s C’s?

The Answer

Thanks for the question. The only instance I can recall of this happening was on The Simpsons where Bart sold his soul. But that was a contract between two individuals. In seriousness, what the reader wants to know is whether a clause is enforceable simply because it was included in the terms and conditions and because the consumer signed it.

Obviously, the contract for the sale of illegal goods and contracts entered into under fraud or duress are not enforceable. But what about provisions that are inarguably skewed in one party’s favor over another? Are those allowed? The short answer is yes. Freedom of contract provides the ability for individuals and corporations to enter into agreements without government interference. If you want to sell me your Rolls Royce for $1 and I accept, a valid contract exists.

Companies argue that consumers voluntarily agree to the terms and conditions for their products and services, and, resultantly, are bound to the terms. Corporations pretend that consumers have a choice when they enter into an agreement. Telecom companies, for example, argue that consumers could have gone elsewhere if they do not like the terms of service. The reality is that all of the phone companies have the same restrictions making this argument disingenuous. Thus, ‘Be sure to read the fine print’ means next to nothing now. Even if a consumer spots a clause that is disproportionately in favor of the corporation, he or she can do nothing about it.

While the terms of the contract may be legally lopsided, that does not mean that corporations can violate laws that exist outside of the agreement. Many DoC readers are familiar with the frowned upon practice of manufactured spending, the process of spending money without really spending. To curb this pastime, banks shut down the customer’s account and vacate all points that are earned. This draconian measure is provided for in the terms and conditions that state that a bank can shut an account down at any time for any reason. What is not allowed and what many banks continue to violate is the federal law which states that a specific reason must be given for account closure.

Take this boilerplate closure letter as an example:

We regret to inform you that following a recent review, the bank has chosen to close the account(s) referenced above. As stated in the terms and conditions, we reserve the right to close your account(s) at any time. Our decision was made following the results of a review of bank information and records.”

Here, the bank is correct in reserving the right to close the account. That is within the terms and conditions. The fatal flaw of the letter is that they provided no reason as to why they are doing so. Although banks will argue that they cannot reveal this information per the Bank Secrecy Act, omitting this critical portion is a violation of federal law.  As a result, the consumer may have a strong claim against the bank.

It is virtually impossible for consumers to do anything without entering into an agreement that grossly favors corporations over customers. To that end, consumers are selling their souls to gain access to products or services. At the same time, there are protections in place that do not leave consumers completely at the mercy of corporations. The devil is in the details, but this time it may be on the side of the consumer.

If you have any follow-up questions please voice them in the comments. If you’d like to discuss anything privately, you can find us at BachuwaLaw.com. Thanks for reading! Also don’t forget to check out the Fine Print series on Frequent Miler.



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Gary Leff

“The only instance I can recall of this happening was on The Simpsons where Bart sold his soul. ”

Gamestop in 2010: http://www.foxnews.com/tech/2010/04/15/online-shoppers-unknowingly-sold-souls.html

People also agree to give up their first born: https://arstechnica.com/tech-policy/2016/07/nobody-reads-tos-agreements-even-ones-that-demand-first-born-as-payment/

Which of course doesn’t change that such clauses are unenforceable.

Matt
Matt

There was a situation 10 or so years ago (I can’t remember that exact details) where some European video game developer buried the “sell us your soul” wording in a long user agreement. They said they did it specifically to make a point about how nobody reads the user agreements.

Matt
Matt

I remembered incorrectly. It wasn’t a video game developer. It was an online video retailer in the UK. The retailer added a clause that people had to opt-out of. If they didn’t opt-out, the video game developer had the option to claim the user’s immortal soul.

https://boingboing.net/2010/04/16/video-game-shoppers.html

Alex Bachuwa
Alex Bachuwa

Thanks Gary lol.

Alex Bachuwa
Alex Bachuwa

That’s pretty funny and accurate.

Jason
Jason

I was under the impression that a reason doesn’t have to be given. When BoA closed my checking account years ago, they claimed the reason was that they made a “business decision.” This was clearly a non-answer, and it is frustrating that I can’t get anywhere with them..and they specifically told me that I am blacklisted for life. Tried emailed executives and filed a CFPB complaint with no success.

Any recourse here?

Alex Bachuwa
Alex Bachuwa

Boa is though because they don’t have an arbitration agreement. If you could find old terms that have them, say, for example, the time you had the card, you may be able to file a claim. Otherwise, you would have to go to small claims and plead your case.

Alex Bachuwa
Alex Bachuwa

Tough not though.

Guy bucktastik
Guy bucktastik

Get a lawyer and sue them, if they violated federal law. Asking nicely didn’t work.

Jeremy
Jeremy

Had my altitude reserve shut down over 15 Samsung pay gift cards over the course of 3 months that were 25$ a piece. I had about 180000pts forfeited. Appeal to office of president didn’t help. Anything for me to do here?

Po
Po

did they refund the annual fee at least?
I think, at this point, the only thing you can do is, when making a churning decision, give high priority to US bank deals. will not get your points back but it will make you feel better about screwing them.

Jeremy
Jeremy

Yes, they did refund the annual fee. I guess my question is, is it legit to be shutdown for even buying a few low denomination gift cards? Where is the line drawn? I wasn’t buying hundreds of dollars. This was about 25$ once every week or two for 3 months.

Ann
Ann

Ugh. 🙁 That is an absurdly small amount for them to have gotten pissy about, compared to the volumes some people around here MS. There are quite a few people who’ve never heard of MSing who buy such modest amounts of gift cards on a regular basis for real reasons – use them as gifts for parties they frequently get invited to, use them to motivate employees, use them to build up a harder-to-waste ‘Christmas fund’ each time they get a paycheck, use them to control kids’ spending e.g. in their own Amazon accounts, etc.

Po
Po

My thinking is, that whatever employee reviewed your account, was too dumb to differentiate between you and MS heavy hitters. Had no idea what he was asked to look for, just blindly followed a procedure as told to him. Then, other dumb employees followed blindly the procedure not to address your request as they were trained.
Think of the bank as a machine that is programmed to operate only one way. Dumb computer who you make business with. Try to feed it the data that it needs to get in order to spit out the money price and not the data that makes it shred your account.
You will get them next time, i am sure. GL.

Alex Bachuwa
Alex Bachuwa

@Jeremy, submit an inquiry and we can discuss it. I need more information.

Tom
Tom

There must be more to the story. How did you earn 180k points and in what timeframe? The $25 transactions might have caused a review, but the shutdown was probably related to the way and speed the 180k points were earned.

Jeremy
Jeremy

I had just moved and put all my moving expenses on this card including repairs/improvements to new house. I tried to use the mobile wallet to get the 3x whenever possible, like paying my rent with radpad via android pay. In fact, most of my spending was with the 3x

Attorney Alexander Bachuwa
Attorney Alexander Bachuwa

I didn’t see an inquiry regarding this. Visit bachuwalaw[dot]com if you want to discuss.

Sexy_kitten7
Sexy_kitten7

Sorry that happened to you. You can read my shutdown story here. If you can’t convince them to pay out you will likely need to sue/arb. US Bank are crooks…
https://www.flyertalk.com/forum/28243997-post117.html

JT
JT

Can someone link to the federal law referenced in the article that banks must provide a reason for shutdown? Seems like good ammo to have.

jd
jd

Glad to know that I won’t be a HumancentiPad

HoKo
HoKo

I feel like this article was incomplete. One of the concluding paragraphs states “Here, the bank is correct in reserving the right to close the account. That is within the terms and conditions. The fatal flaw of the letter is that they provided no reason as to why they are doing so. Although banks will argue that they cannot reveal this information per the Bank Secrecy Act, omitting this critical portion is a violation of federal law. As a result, the consumer may have a strong claim against the bank.”

So I’m left wondering “so what could I sue them for/how would I proceed”?

I know that every case is unique but this is a fairly specific example so I’d be interested to know how the lawyers would go after them. For example, would they be suing to recover the value of points that were taken away, would they be suing for some random amount of money, would they be suing to get the account reopened since the lack of disclosure of the reason for disclosure is a violation of federal law, etc.?

Alex Bachuwa
Alex Bachuwa

Good comment. It’s been my experience that points are rarely refunded and, as I wrote, they can shut you down and likely won’t reopen. You would file an arbitration because of the negative repercussions of having an account closed by the issuer and simply because the bank did not comply with federal law which provides for monetary damages.

HoKo
HoKo

Thanks. Would lawyers be willing to take these sort of cases on a contingency basis? Just wondering whether it’d be worth spending all the money/time to hire a lawyer. Are the monetary rewards from a successful suit likely to be significant?

Ann
Ann

Generally not. The people who avidly pursue these kinds of lawsuits are generally lawyers themselves, and thus able to do so at little to no expense, same as with those who sue telemarketers for illicit calls.

Sexy_kitten7
Sexy_kitten7

Correct. You can also go pro se. I “taught” myself law to go after US Bank but did not end up suing. It is more complicated than you’d think (at least as shown on TV) and I had the benefit of 2 lawyer friends.

TPOL (Alex) does take cases on a contingency basis though so reach out to him if you need help!

Attorney Alexander Bachuwa
Attorney Alexander Bachuwa

@ann We are trying to change that by taking cases like this on a contingency fee basis. That’s why we write these articles.

Attorney Alexander Bachuwa
Attorney Alexander Bachuwa

@hoko Yes, my firm takes these cases on a contingency. Submit an inquiry on bachuwalaw[dot]com if you would like to discuss this further.

HoKo
HoKo

Great to know, I will definitely keep you guys in mind if/when I encounter this sort of scenario!

HoKo
HoKo

since the lack of disclosure of the reason for account closure**

Ender
Ender

Even they are required to give reasons, they can still throw out something like “wish not to continue relationship” which literally says nothing.

I believe the real problem here is that consumers are way less legally resourceful than corporations, making them almost impossible to claim against.

Attorney Alexander Bachuwa
Attorney Alexander Bachuwa

That’s not true. There has to be a specific reason.

Arash
Arash

Thank you for the informative post. I have a question related to this post. Recently, CHASE closed all my credit card accounts because my wallet was stolen, few of my chase cards were in that wallet, and chase had to reimburse me for over $15,000 in fraudulent charges, even though I informed them of the incident within the 1st two hours. I was not held liable for the fraudulent charges, but their risk department closed all my accounts because I have been negligent and not protected my cards appropriately as in the terms and conditions and have put chase at undue risk. I am still stunned by the letter they sent me. However, do not know how legal it is for them to do a thing like this.

HoKo
HoKo

Wow! That is a wild story. Sorry to hear it.

What have you done so far to try and appeal?

Arash
Arash

I have complained to the CFPB. Their response was essentially that the accounts remain closed with a copy of their terms and conditions attached.
I have filed a 2nd complaint to CFPB, stating that I am willing to sign a document saying that if fraudulent charges occur on my credit cards again due to proven negligence, I might be held liable by chase, and hope to significantly reduce their risk by such a thing. Waiting for their response…

HoKo
HoKo

What a ridiculous decision by Chase. Very heavy handed

Attorney Alexander Bachuwa
Attorney Alexander Bachuwa

@arash Submit an inquiry on bachuwalaw[dot]com so I can get more information to see if I can help.

Ann
Ann

You might want to also consider talking to your local media (TV/newspaper) about this… they love crime-related stories… “robbery victim penalized by bank” sounds like an attractive angle. The bad PR from stories like that often gets big corporations to change their tune.

T
T

I thought your last statement about the bank closing the account but never informing of the reason interesting. I recently had my schwab checking and brokerage account closed, and i’m sure its because i was depositing money orders, but they never indicated why or sent me any notice, just a polite phone call where they didn’t state any specifics.

Attorney Alexander Bachuwa
Attorney Alexander Bachuwa

The law doesn’t apply to checking account, only credit accounts.

maxcat
maxcat

What about ebay saying you violated T’s & C’s by buying too many daily deals and permanently restricts you from buying when you have a $200 gift card locked to your account?

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