General Mills caves on consumer legal restrictions

Food giant General Mills (GIS) made an abrupt u-turn over the weekend in its plan to restrict legal options for disgruntled consumers.

A consumer who used any of various online resources, including downloading product coupons, entering company contests, or receiving electronic newsletters, would have to agree to use binding arbitration rather than a court trial if they brought suit over a product defect or problem. Furthermore, they would make themselves ineligible to take part in a class action lawsuit.

A combination of negative publicity and the ensuing customer backlash caused General Mills to rethink its policy. A company blog post said that it "never imagined this reaction" and that it was "sorry we even started down this path." The post also apologized.

Companies typically consider the consumers who interact regularly with them to be their best customers. That would mean the issue of pushback likely would have been of particular concern.

"Because our terms and intentions were widely misunderstood, causing concern among our consumers, we've decided to change them back to what they were," wrote Mike Siemienas, General Mills manager of brand media relations, to CBS MoneyWatch in an email over the weekend. "As a result, the recently updated legal terms are being removed from our websites, and we are announcing today that we have reverted back to our prior legal terms, which contain no mention of arbitration."

However, while the company focused solely on the arbitration terms in its email and post, the class action suit terms were possibly more serious. Although affected consumers could have brought action against the company, even if forced to use an arbitration process, they would have completely waived the right to join class actions suits. Class actions suits are often a way for consumers to demand redress of perceived wrongs when individual legal action would be prohibitively expensive.

General Mills paid $8.5 million in 2013 to settle lawsuits challenging health claims made on Yoplait Yoplus yogurt packaging. The change in legal terms this year came after a court refused to dismiss a lawsuit about claims that Nature Valley products are "natural" when the ingredients could be genetically modified or processed.

The New York Times story that set off the flurry claimed that even liking one of the company's many brands on Facebook or joining a brand online community on the social networking site would be enough to trigger the restrictions.

Omri Ben-Shahar, a professor of law at the University of Chicago and expert in consumer legal issues, told MoneyWatch last week that the story was "grossly misleading." A consumer would have to explicitly agree to the terms. Simply visiting a website would not be enough to restrict rights under U.S. law.