Reading the Fine Print
You see examples of fine print in online advertisements, newspapers, magazines, credit card offers, contracts, and even on TV. They’re often footnotes at the bottom that explain or clarify the product deal.
The fine print holds the details, terms and conditions. The law requires “clear and conspicuous” disclosures—which means that the important terms of the deal can’t be hidden in tiny font.
It’s important to read and understand the fine print. If you don’t understand what it means, ask someone you trust, like a family member, to read it with you. You can always ask the business what the fine print means, but it’s what’s in writing that matters—not what someone tells you. If you’re not satisfied with the business’s response, you may want to shop somewhere else.
Common phrases used in advertisements or offers include:
“Exclusions apply” The fine print sometimes comes with a list of items and product classes that are excluded from the deal.
“Not valid in conjunction with…” Restaurant chains in
particular tend to be fairly restrictive about which promotions can be
combined with a coupon. Before you order, look at the fine print and
make sure your preferred entrée isn’t considered a special.
“Minimum purchase of…” This is common wording on gift
certificates. Other terms and conditions are often found including the
provision that the gift certificate is for dine-in customers only. Read
“Not Valid on…” Anytime you see an airline holding a fare sale,
the first thing you should do is scroll down and check-out the fine
print. What you’re likely to find are several restrictions to the sale
“No returns or exchanges” When a retailer holds a “final sale”,
that’s exactly what it means: All sales are final.
“Participating locations only…” Many national chains, especially restaurant chains, operate on a franchise model. Independently owned locations may choose to participate in a national promotion or special offer. The result is that many coupons and deal announcements will come with fine print “participating locations only.”
Credit card offers may have fine print that outlines terms and conditions in a language that can be difficult for the average consumer to understand. Experts say that you need to carefully examine these terms and conditions. When you sign the application, you have committed to abide by its terms -- whether you understand them or not.
The Credit Card Accountability, Responsibility and Disclosure, or Credit Card Act of 2009, provides consumer protections for credit cardholders. It is important to read your agreement, especially the fine print, to understand your rights, penalties, transaction fees and to avoid unnecessary surprises.
Common phrases used in credit card offers include:
“Raising rates” All issuers will change your rate if you
violate any part of the credit card agreement, but some are more
forgiving than others.
“Average daily balance” A technique for calculating
finance charges (such as in a bank account, charge account, or credit
card accounts) based on average balance that exists each day.
“Grace period” The grace period ranges from 20 to 25 days.
“Default APR” The default interest rate is the high rate that a cardholder may be charged for violating the terms of the credit agreement. Default rates are usually calculated by adding a margin -- a set percentage -- to the prime rate, so the rate may vary.
“Intro rate for purchases” APRs (Annual Percentage Rate) on credit cards can't increase for the first year after the account is opened. Exceptions include expiration of a promotional rate, termination or completion of a workout plan, a change in the index rate or a 60-day delinquency.
“Universal Default" If the cardholder is reported as delinquent on an account with any other creditor, the card issuer may increase the APRs on your account up to the maximum default APR."
“Balance transfer fees are added to the purchase balance and are subject to the APR for purchases.” This phrase states that the fees you pay for a credit card balance transfer are added to your balances from purchase activity and you are charged interest on this combined total.
“Disputes relating to the account are subject to binding arbitration.” The inclusion of this phrase in the terms and conditions protects the credit card issuer from lawsuits and class action suits. If the cardholder has any problem or dispute regarding their account, they are limited to an arbitration hearing. The arbitrator is chosen and hired by the card issuer, and the cardholder's legal options are severely restricted. Most credit card offers now include this provision.
Many people don’t read contracts especially the fine print before signing. Receipts, sales slips, tickets, guarantees --even parking valet stubs -- can all serve as contracts. In order to make an informed decision, consumers should do the following:
Read the Contract Ahead of Time
Whenever you're making a major purchase, insist on seeing the contract well in advance of when you need to sign. Don't rely on the salesperson's summary of what the contract means. Your signature on a contract indicates that you have read and understood it -- even if you haven't.
Ask for help
If you have trouble with the legal jargon, get a friend to help or contact an attorney to review the contract. Never sign a contract that contains blanks, cross them out before you sign. If there are any clauses that you don't like, ask the company to delete them.
Arbitration clauses are one thing you may want to try to strike from some contracts you sign. Arbitration can get your problem resolved without expensive legal costs. However, legally binding arbitration denies you the right to sue the company in court. Verbal promises are not enough. If you want a clause added or deleted for your protection, write it in or ask for an addendum and get a company representative to sign or initial it. Never leave a business without a copy of the signed contract.
If you think a business isn’t giving you the right information in its ads and fine print, contact the FTC at 1-877-FTC-HELP (382-4357) or visit www.ftc.gov/complaint.