Retrieval-Augmented Detection of Potentially Abusive Clauses in Chilean Terms of Service

Online Terms of Service often function as contracts of adhesion, creating asymmetries that may expose consumers to potentially abusive clauses. In Chile, assessing such clauses is legally challenging because some provisions clearly violate mandatory consumer law, whereas others depend on broader standards such as good faith and contractual imbalance. We present a retrieval-augmented generation framework for the automated detection and classification of potentially abusive clauses in Chilean Terms of Service. Designed for local execution, it combines efficient clause detection, hybrid dense--sparse retrieval, reranking, and prompt augmentation to support medium-sized open-weight language models. We also introduce the Chilean Abusive Terms of Service Extended corpus, comprising 100 contracts and 10,029 annotated clauses in 24 legally grounded categories spanning illegal, dark, and gray clauses. Experiments comparing commercial and open-weight language models, fine-tuned encoders, and traditional baselines show that retrieval-augmented prompting substantially improves performance and enables local models to approach larger cloud-based systems at lower computational and token cost. The study also contributes a refined legal annotation scheme and a practical design for AI-assisted consumer contract review.

Predicting potentially unfair clauses in Chilean terms of services with natural language processing

This study addresses the growing concern of information asymmetry in consumer contracts, exacerbated by the proliferation of online services with complex Terms of Service that are rarely even read. Even though research on automatic analysis methods is conducted, the problem is aggravated by the general focus on English-language Machine Learning approaches and on major jurisdictions, such as the European Union. We introduce a new methodology and a substantial dataset addressing this gap. We propose a novel annotation scheme with four categories and a total of 20 classes, and apply it on 50 online Terms of Service used in Chile. Our evaluation of transformer-based models highlights how factors like language- and/or domain-specific pre-training, few-shot sample size, and model architecture affect the detection and classification of potentially abusive clauses. Results show a large variability in performance for the different tasks and models, with the highest macro-F1 scores for the detection task ranging from 79% to 89% and micro-F1 scores up to 96%, while macro-F1 scores for the classification task range from 60% to 70% and micro-F1 scores from 64% to 80%. Notably, this is the first Spanish-language multi-label classification dataset for legal clauses, applying Chilean law and offering a comprehensive evaluation of Spanish-language models in the legal domain. Our work lays the ground for future research in method development for rarely considered legal analysis and potentially leads to practical applications to support consumers in Chile and Latin America as a whole.