New technology can enhance consumer comprehension of complex contract terms.
Consumer contracts and privacy policies are inaccessible, long, complex, and tedious. It is not surprising that very few people read contracts—let alone understand them—before signing them or clicking “I accept.” This so-called no-reading problem poses a fundamental challenge for understanding what justifies contract enforcement: If people do not know what their agreements say, how meaningful is their consent?
Scholars have written long volumes on the no-reading problem. Worried about the potential for abuse and exploitation, scholars and policymakers have devised various interventions. Proposals include banning specific egregious terms, mandating that key terms be conspicuous, labeling and ranking contracts and privacy policies, providing administrative oversight, and giving judges broad discretion to strike down offensive terms.
Still, any honest assessment of the state of the debate must conclude that any generally accepted regulatory solution remains far away. If anything, the controversy over how to tackle fine print has intensified in recent years.
But what if the no-reading problem could be solved without any government intervention? What if reading could be automated?
It can be. Using state-of-the-art technological tools, most famously GPT-3, we show in a recent article how breakthroughs in artificial intelligence (AI) language models make it possible to have machines read for us. We dub this technological advance—which makes complex contracts simple, short, and easy to understand—a smart reader.
Smart readers can fundamentally change the way consumers interact with legal documents. Consider, for instance, a common scenario involving an individual about to purchase a tablet device. Tucked inside the boilerplate license agreement is this complex and uninviting contract clause:
Controlling Law and Severability. This License will be governed by and construed in accordance with the laws of the State of California, excluding its conflict of law principles. This License shall not be governed by the United Nations Convention on Contracts for the International Sale of Goods, the application of which is expressly excluded. If you are a consumer based in the United Kingdom, this License will be governed by the laws of the jurisdiction of your residence. If for any reason a court of competent jurisdiction finds any provision, or portion thereof, to be unenforceable, the remainder of this License shall continue in full force and effect.
With one click on the smart reader app, and the buyer gets the following accessible explanation:
This section says that the law that applies to this license is the law of the state of California. If you live in the UK, then the law of your country will apply instead.
Next, the buyer wants to know what “severability” means. Another click on the smart reader app, and the user receives:
The section also says that if any part of this license is found to be unenforceable by a court, the rest of the license will still apply.
To be clear, these examples come from an actual AI-powered language model. A technological application did the reading of the contract and provided the explanation.
Smart readers have additional capabilities. A smart reader can summarize contracts. It can explain them. It can also adapt them to the specific reader, giving one explanation to a curious teenager and another to a sophisticated individual.
Importantly, smart readers can also score and benchmark contracts and privacy policies. Much like online reviews that offer a score, a smart reader can rate different contracts or policies.
A rating or score eases the user’s ability to assess the overall strength of the policy at hand. Notably, a smart reader also provides an industry mean score, alongside comparisons to competitors that offer better terms. Taken together, a smart reader provides not only an understanding of the fine print but also a grasp of the market and the alternatives it offers.
What do smart readers mean for the future of consumer law? Much depends on how the technology will be implemented and commercialized. But despite this uncertainty, it is safe to say that this technology can disrupt the current status quo between firms and consumers. Smart readers provide consumers with a meaningful option to learn about the contents of their contracts. If deployed widely, smart readers can improve markets, advance equality and participation, and solve many of the stickiest issues involving consumer contracts and privacy policies.
This development, however, does not mean abandoning the current legal safeguards completely. The technology—though impressive—is far from perfect. Mistakes are inevitable. Less innocently, because the technology relies on AI, some firms can manipulate smart readers by using sophisticated methods known as adversarial attacks. The legal system is ill-equipped to detect or deter such manipulations.
All in all, though, smart readers offer an exciting promise of solving the long-standing no-reading problem. It is possible that, even if freely available, consumers will not come to use them. But in any event, the potential risks and limitations of language model technology deserve policy and scholarly attention.