Liked Cheerios on Facebook? You Can Still Sue the Company

Source: Thinkstock

Source: Thinkstock

General Mills (NYSE:GIS) announced via email on Saturday night that the company had removed a newly introduced arbitration clause from its site that would have reduced consumers’ ability to sue the food producer. In an unexpected turnaround, General Mills stated that due to consumer concerns, it would immediately discard the revised terms posted the previous week.

As reported in The New York Times, General Mills spokesperson Mike Siemienas wrote that due to objections to the company’s clause requiring that consumers agree to arbitration or other similar negotiations instead of forming a class action suit, it had removed the condition. The clause would have affected any consumer who purchased a General Mills product, interacted with the company via social media, entered one of their sweepstakes, or downloaded a coupon. General Mills, having paid $8.5 million last year to settle accusations of misleading health claims associated with its Yoplait brand, inserted the arbitration policy after a California judge ruled against their motion to dismiss a case alleging deceptive marketing associated with its Nature Valley brand.

The email was followed up with a blog post by Kirstie Foster, Director of External Communications for General Mills, who confirmed the removal after objections raised by a “misreading” of the change in Minnesota-based company’s terms and conditions. While the maker of brands such as Cheerios, Betty Crocker, and Green Giant still support arbitration as a method of streamlining customer complaints, Ms. Foster apologized on behalf of the company and assured the public that no arbitration clause had been enforced.

Credit card and mobile phone companies have increasingly introduced arbitration requirements into customer contracts since the Supreme Court’s 2011 ATT v. Concepcion decision, limiting consumers’ ability to file class action lawsuits. Advocacy groups argue that arbitration eliminates certain consumer protections provided in class action suits. General Mills would have been the first major food manufacturer to include an arbitration clause in its terms and conditions.

Microsoft (NASDAQ:MSFT) also recently reversed policy changes based on consumer feedback. Brad Smith, Microsoft’s General Counsel and EVP of Legal & Corporate Affairs, posted on the company’s Technet blog last month about changes to the company’s privacy policy after a report revealed Microsoft read a blogger’s Hotmail email without permission while pursuing a source code leak. Maintaining that the company was within its rights, Mr. Smith wrote that in the interest of their users’ privacy, Microsoft would refer future matters to local authorities instead of inspecting emails and other private content themselves. He added that the company will partner with advocacy groups Center for Democracy and Technology as well as the Electronic Frontier Foundation to explore digital privacy solutions.

In March 2013, Microsoft announced it would reinstate consumers’ licensing permissions to install the company’s software on a single device at a time instead of needing to repurchase their product with each new computer. A few months later, due to threatened backlash, Microsoft changed its policy, eliminating the resale of Xbox One games as well as lifted the gaming console’s internet connectivity restrictions.

In January 2014, Apple (NASDAQ:APPL) agreed to refund customers $32.5 million as part of a Federal Trade Commission settlement stemming from a complaint that users were billed for their childs’ app purchases made without parental authorization. Apple also agreed to change its billing system to ensure “express, informed consent” before charging for mobile purchases. In July 2012, Apple reversed its decision to withdraw from EPEAT, an electronic environmental rating system. In a letter to its customers, Bob Mansfield, then Hardware Engineering Chief for Apple, wrote that following consumer feedback, Apple would re-register its products on EPEAT, used by the U.S. and other governments as well as major corporations to determine environmental standards for technology purchases.

All eyes will be on Apple this Wednesday after the market closes, when the tech giant reports their fiscal second-quarter earnings.

More From Wall St. Cheat Sheet: