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

Abstract

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.