This Article investigates consumers’ beliefs about contracts that are formed as a result of fraud. Across four studies, we asked lay survey respondents to judge scenarios in which sellers use false representations to induce consumers to buy products or services. In each case, the false representations are directly contradicted by the written terms of the contract, which the consumers sign without reading. Our findings reveal that lay respondents, unlike legally trained respondents, believe that such agreements are consented to and will be enforced as written, despite the seller’s material deception. Importantly, fine print discourages consumers from wanting to take legal action, initiate complaints, or damage the deceptive firm’s reputation by telling others what happened. We find that the presence of deception during the contract formation process has little effect on consumers’ beliefs about whether the contract will be or should be enforced as written. While informing consumers about antideception consumer protection laws can alter their perceptions of fine-print fraud, we find that such information does not completely counteract the psychological effect of the fine print. Taken together, these findings suggest that consumers who would otherwise complain about being cheated become demoralized when they discover they have signed a contract whose terms contradict what they were promised. We posit that this occurs because many people are intuitive contract formalists: They assume that all contracts—even those induced by fraud—are binding. The implications, we argue, are that prevailing methods of addressing deceptive business practices, which often put the onus on victims of fraud to complain, fail to take account of consumer psychology.
|Number of pages||58|
|Journal||Stanford Law Review|
|State||Published - Mar 2020|
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