Social psychology

Study: contractual texts written in ALL-CAPS are harder to read, yet remain in use

woman at laptop - all caps and contractual liability

Contractual agreements often make generous use of “ALL-CAPS” to draw special attention to the important parts of the text. The idea, ostensibly, is that by making those capitalized terms stand out, consumers will pay more attention to them.

But as the authors of a new paper on all-caps explain, the notion that this archaic technique improves consumer consent has never been validated. Even today, there is still no empirical evidence to support it.

So researchers Yonathan Arbel and Andrew Toler, of the University of Alabama School of Law, decided to put all-caps to the test. In several experiments, they found no benefits to capitalizing blocks of text in a contract. If anything, readers, especially older readers, found that text written in all-caps is harder to understand.

Their new paper appeared in November in the Journal of Empirical Legal Studies. Its authors say it is the first “to empirically examine the effectiveness of all‐caps.”

A bad idea with a long history

This lack of prior research into the contractual use of all-caps is odd. The practice is quite old, and the stakes are high. The belief in the benefits of capitalization dates back to at least the 19th century. And even today, many courts, legislators, and government agencies still insist that the key terms of a contract be displayed in all-caps, ostensibly to protect consumers.

Courts, for example, often rule that text written in capital letters makes it sufficiently conspicuous. Likewise, if key parts of a contract are not written in all-caps, courts will often deny enforcement.

This practice has serious and wide-ranging effects. It influences contractual liability in areas such as wrongful death claims, arbitration agreements, and consumer warranties.

So if all‐caps formatting does not in fact improve “the meaningfulness of assent,” as the authors write, “then courts have been erroneously enforcing onerous terms,” and have been “depriving consumers of recourse based on faulty assumptions.”

All-caps everywhere

For this study, the authors collected standard contracts from 500 companies in the United States, such as Google, Facebook, Uber, and Amazon. They found that 77% of these contracts have at least one clause in all-caps, suggesting the practice is still very much alive.

They also tested whether all-caps formatting actually helps people to comprehend or recall such contractual clauses. Using Amazon’s Mechanical Turk, they recruited a sample of 570 participants in the United States. About 45% of them were female, and their average age was 38.

The researchers instructed the participants to read through a two‐page contract, containing 15 paragraphs. They modelled this document on Spotify’s end-user agreement. One version, read by half of the participants, contained one paragraph written in all-caps. The other half of the subjects read the same contract, only with this paragraph written using normal capitalization. The researchers then tested how accurately the participants answered questions about a term that appeared in that paragraph.

No helpful effect at all

They found that all‐caps had no effect on improving the readers’ comprehension or recall. Instead, they found some evidence that all‐caps actually decreases comprehension for older readers. Participants older than 55 were 29% more likely to misunderstand their obligations when they read the contract with the capitalized paragraph. In fact, “the older group answered incorrectly at almost double the rate of same‐age peers in the control group,” who read the same paragraph with normal formatting.

A smaller experiment also found that all-caps offered no benefits when the text had to be read very quickly. Another test showed that an all-caps version of a text was 22% more difficult to read and understand. And a final experiment demonstrated that all‐caps paragraphs take 13% longer to read, without leading to any improvement in recall.

Why does block capitalization fail?

Past research has shown that all‐caps formatting obscures the differences between letters, because capital letters lack ascenders and descenders. That sameness makes the text harder to read.

Cultural changes also play a role. Long ago, capital letters signified grandeur and seriousness. But in today’s Internet culture, the authors point out, “there is a growing convention that all‐caps is similar in effect to yelling.” This negative emotional association might encourage readers, consciously or unconsciously, to ignore text written in all-caps.

Add to that the fact Americans’ vocabulary levels are dropping, and it soon becomes clear that a lot of contractual texts aren’t being properly read.

Dubious incentives to hide contractual liability

Though typical sales texts will capitalize some words (BUY NOW!), they rarely capitalize entire paragraphs in the way contracts do. In other words, when companies want to make important features conspicuous, they use a range of design tools such as varying colors, typefaces, and backgrounds. These texts “have no resemblance to the texts they use to obligate and bind consumers,” the authors write.

So why do companies continue to use all-caps in texts that should ideally make contractual liability crystal clear? Do they “genuinely believe,” the authors ask, “that using all‐caps will promote consumer understanding?” A more sinister interpretation is that companies “take advantage of judicial naiveté to hide some of the most onerous and costly terms in plain sight by using all‐caps.” In this scenario, the authors write, “not only do courts not protect consumers’ interests by favoring all‐caps, they invite abuse.”

A better and bolder alternative to all caps

So if archaic and shouty all-caps formatting doesn’t work, what does?

The researchers compared four other ways of highlighting text, and found that boldface had the most promising results.

In two experiments, bold text outperformed “boxing” text in a so-called Schumer Box (New York Senator Chuck Schumer sponsored legislation to make credit card statements easier to understand).

It aso outperformed “single caps” (i.e. one sentence written in all-caps within a paragraph otherwise capitalized normally), or normal text. These results support prior research showing that readers prefer boldface over other types of emphasis. And they also demonstrate that formatting interventions can indeed improve consumers’ ability to understand the important terms of the contractual agreements they enter into.

The authors of this paper pull no punches in calling for change. “We believe that there is a compelling reason to abolish judicial reliance on all‐caps,” they write. “Courts should stop giving any weight to the use of all‐caps in contracts,” and “should desist the century‐old policy of encouraging firms to use them in their contracts.”

Study: “ALL-CAPS”
Authors: Yonathan Arbel and Andrew Toler
Published in: Journal of Empirical Legal Studies
Publication date: November 2, 2020
Photo: by Andrea Piacquadio via Pexels