Several years ago, Scott Adams, the author of “Dilbert,” published a comic strip that has stuck with me throughout the years.

In the strip, Dilbert buys a new piece of Microsoft software. So excited to see what the software has to offer, he neglects to read the license agreement. He soon learns that there is a clause buried in the text of the massive agreement that mandates the user of the software must become Bill Gates’ towel boy for life.

Funny, sure, but if you spend time looking at the law, and the evolution of the law in this area, you will see more truth in this than humor.

Every day, busy consumers are confronted with agreements and contracts for the most mundane services and products. Online consumers routinely scroll through user agreements on software and websites without reading the text.

Consider the contracts consumers are given when purchasing a cell phone; do the cell phone providers really expect purchasers to wade through the pages of small type? Are the sales staff equipped to answer questions about the terms, or to explain the nuances of the arbitration clauses? Most would say “no” to both of these questions.

A few years ago, Vincent and Liza Concepcion, a Californian couple, purchased a new cell phone from AT&T. The phone was advertised as “free,” so the couple was understandably confused when they received a bill for $30.

What they found after doing some digging is that -- according to AT&T – ‘free’ doesn’t really mean ‘free’ – taxes and other fees weren’t included in the deal.

Upset at what they perceived as false advertising, the Concepcion’s sued AT&T. They weren’t the only ones who found the offer disingenuous, and the lawsuit was ultimately combined into a class action law suit.

That is where things get interesting – most people think that if they feel a company cheated them, or did them wrong, they have the right to take the company to court.

Not in this case.

Unbeknownst to the Concepcions and many others, buried in AT&T’s contract is the following clause: “Any arbitration under this Agreement will take place on an individual basis; class arbitrations and class actions are not permitted.”

In other words, people purchasing phones unknowingly signed away their right to a common form of redress, the class action lawsuit.

Paint me a hardened cynic, but I know why AT&T did this, why they would rather face thousands of individual claims than one large lawsuit.

First, AT&T knows that the Concepcions could never afford to hire a lawyer to fight a case in which the total loss is only $30. The only way consumers can defend their rights in these types of cases are by joining together, sharing the cost of legal representation across thousands, even millions of plaintiffs.

Second, AT&T knows that professional arbiters are usually much more likely to decide a case in favor of the defendant in these kinds of consumer cases. One study by Public Citizen, a non-profit research organization, found that businesses win a stunning 96.8 percent of the time in arbitration handled by the National Arbitration Forum.

Perhaps most important, companies like AT&T know that by building these barriers to redress, most consumers would throw up their hands in disgust, mark up the monetary loss to experience and move on.

In this specific case, AT&T argued that the Concepcion’s class action should be tossed from court because their contracts excluded any right to a class-action lawsuit.

In turn, the Concepcion’s lawyers argued that, according to the Federal Arbitration Act, contracts requiring arbitration are not to be enforced if a state law says the contracts are unenforceable. In this case, Californian courts have generally ruled that these contracts are unenforceable.
The case was appealed all the way up to the Supreme Court. In a contentious 5-4 decision, the court ruled in favor of AT&T.

Justice Stephen G. Breyer asked the key question in his dissenting opinion: “What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?”

As you might expect, I do not agree with the decision. I believe the Supreme Court has stripped consumers of one of the most important tools left in their battle against unscrupulous businesses. What the court has done – unintentionally or not – is to say to businesses, “go ahead and have your way with consumers, but do it in small ways so they can’t rebel at the abuse.”

Already, many defense lawyers are filing motions to compel arbitration in a variety of cases, including a case against a payday lender in Philadelphia, a case against U.S. Bancorp and a case in Los Angeles against Alliance Data Systems Corporation.

AT&T’s contract terms are hardly unique among cell phone providers. In fact, both Verizon and T-Mobile have nearly identical forced arbitration clauses in their contracts.

In the longer term, this ruling will compel companies throughout the country to work forced arbitration clauses into their agreements. Like the Concepcions, consumers will be unlikely to discover these clauses before it is too late.

Amid all these dire predictions, I do have two pieces of news that offer some hope for consumers.

First, the Supreme Court has agreed to take another case on this issue. The case involves credit card companies that charge massive fees for low-rate credit cards. The companies have claimed the case must be handled through arbitration because of a clause in the credit card agreement. I hope the Supreme Court will clarify its position and support consumers’ rights when this case is decided next fall.

Second, the new Bureau of Consumer Finance Protection (BCFP), created by the recent Dodd-Frank Wall Street reform bill, may have the power to restrict companies from putting forced arbitration clauses in their contracts. There are those in the house and senate, though, trying to gut the BCFP just as it is getting on its feet.

In the meantime, consumers should read contracts carefully and seek the best legal counsel available in the event of a serious complaint.

After all, who wants to be Bill Gates’ towel boy?