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New eBay EULA Prohibits Class Action Lawsuits 234

First time accepted submitter dangthill writes "On August 21, eBay updated its end-user agreement by adding a binding arbritration clause. By accepting the new agreement, users forfeit their right to join class action lawsuits and instead must submit to arbitration. However, users may opt-out by mailing eBay a signed notice. eBay joins Microsoft, Sony, Electronic Arts, Valve and other companies attempting to prevent class actions after the Supreme Court of the United States ruled such tactics valid."
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New eBay EULA Prohibits Class Action Lawsuits

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  • so? (Score:5, Informative)

    by firex726 ( 1188453 ) on Thursday August 23, 2012 @10:54AM (#41095613)

    Doesn't like every other EULA out there do this as well?

  • by jellomizer ( 103300 ) on Thursday August 23, 2012 @10:57AM (#41095675)

    Class actions are less about justice but revenge.
    If you win a big case you usually get like 100 bucks out of the deal (A lunch for two at a 2 star restaurant). The company need to pay the $100 * 1,000,000 plus legal fee. So they loose a lot of money, the victims let little if any (because they will appeal it over and over or just refuse to pay).
    You you loose, the company looses. The only one getting big money are the lawyers, unless you happen to get a movie deal out of it.

  • by Impy the Impiuos Imp ( 442658 ) on Thursday August 23, 2012 @11:04AM (#41095789) Journal

    1. Congress, and the US, have an interest in not clogging courts. If you have an issue with the law, talk to your Congresscritter.

    2. eBay does something it doesn't have to -- lets you opt out.

    3. It is also a legitimate concern that businesses may create a business model around lots of low-value but improper charges. Even if every one goes against them in arbitration, their business model may account for that in making it worth it. for the remaining masses of uncontested charges. Again, talk to your congresscritter.

  • Re:so? (Score:5, Informative)

    by mark-t ( 151149 ) <markt.nerdflat@com> on Thursday August 23, 2012 @11:04AM (#41095791) Journal
    Possibly.... but depending on your jurisdiction, EULA's don't have any legally binding power anyways (in particular, an EULA cannot take away any of your rights because you have not signed it such that a copy of the contract and your signature could be reviewed by a third party in the event of a dispute).
  • by cpu6502 ( 1960974 ) on Thursday August 23, 2012 @11:16AM (#41095985)

    That sounds simple enough (opt out) until you realize that Ebay owns Paypal which was prosecuted by the U.S. DOJ for stealing customer funds.

    Under "arbitration" Paypal/ebay had decided that the customers don't deserve to get their money back. Why? Because Paypal was losing money through buyer fraud (credit card chargebacks mostly) and they had a right to take, not just the money lost but ALL the buyers' money, and never return it. They also took money from sellers. (You can read the thousands of stories at

    Under the old rules Paypal/ebay was sued under a class-action lawsuit and forced to refund all the money to their customers. Under the new rules of forced arbitration & no lawsuits..... I guess you're out of luck. Paypal/ebay gets to take your money and keep it.

  • Re:Plague (Score:4, Informative)

    by Microlith ( 54737 ) on Thursday August 23, 2012 @11:18AM (#41096007)

    Do you have any evidence that arbitration actually biases it in their favor?

    Virtually all of these agreements explicitly specify the company that will handle the arbitration and from the ones that I've seen have the company being challenged paying for it. Thus, it's in the arbitrator's interests to find for the defendant so that they keep coming back. They'll be dropped in a heartbeat if they find for the plaintiff.

    if it actually is biased for the companies, they could be sued over that for violating the law.

    And you'd have to prove that well enough to get the Federal Government to pursue the case.

  • German Situation (Score:4, Informative)

    by Anonymous Coward on Thursday August 23, 2012 @11:21AM (#41096091)

    Here is the situation for Germans:

    As long as you are a CONSUMER, i.e. a private buyer or seller, that clause is invalid, since law requires such an arbritration clause to be settled in an entirely separate contract, and to be signed in person OR digitally as defined in BGB and SigG (there is almost no way to satisfy those requirements for a company like ebay or Valve at the moment).
    If you are a COMMERCIAL seller (indication: you must accept returns), then the clause is indeed binding.

    There is NO customer protection AT ALL in EU regulations in that regard.
    The situation WILL differ depending on your country.

  • by RobertLTux ( 260313 ) <> on Thursday August 23, 2012 @11:23AM (#41096145)

    the big problem is since the arbitration company is paid for by the company they will automatically be biased in favor of KEEPING THE CONTRACT.

    so yes you could in theory sue over the arbitration not being fair but you agreed that the arbitration was BINDING.

  • Re:Plague (Score:4, Informative)

    by fuzzyfuzzyfungus ( 1223518 ) on Thursday August 23, 2012 @11:29AM (#41096245) Journal

    This look [] at credit-card related MBA doesn't look good. It also isn't a good sign that even the Wall Street Journal [], not exactly known for its The Daily Worker editorial slant, has observed the problem.

    So, yeah, the available statistics don't look good, and the structure under which company/consumer arbitration is operated(Company requires many arbitrations/year, gets to select arbiters, results of past arbitrations are obviously available to the company; but typically not available to the consumer, arbiters know that future business can depend on past 'results') it'd be a fucking miracle if any impartiality existed...

  • by MetalliQaZ ( 539913 ) on Thursday August 23, 2012 @11:34AM (#41096349)

    Never leave money in Paypal's hands. Never. They WILL take it eventually. I always use CC transactions for buying and dump out any seller cash immediately.

  • by djl4570 ( 801529 ) on Thursday August 23, 2012 @11:42AM (#41096479) Journal
    From Wikipedia:

    In August 2002, Craig Comb and two others filed a class action against PayPal in, Craig Comb, et al. v. PayPal, Inc.. They sued, alleging illegal misappropriation of customer accounts and detailed ghastly customer service experiences. Allegations included freezing deposited funds for up to 180 days until disputes were resolved by PayPal, and forcing customers to arbitrate their disputes under the American Arbitration Association's guidelines (a costly procedure). The court ruled against PayPal, stating that "the User Agreement and arbitration clause are substantively unconscionable under California law," noting their unjustifiable one-sidedness and explicit prohibition of class actions produces results that "shock the conscience" and indicate PayPal was "attempting to insulate itself contractually from any meaningful challenge to its alleged practices"

  • by Anonymous Coward on Thursday August 23, 2012 @12:25PM (#41097197)

    This is a subject on which I have experience. I am an arbitrator. I occasionally am asked to decide consumer cases, but that is not my primary area. I have nothing to do with ebay arbitrations. I know a good bit about the American Arbitration Association.

    The issues here are not simple, and there are rational arguments both ways. I'll leave PayPal out of this discussion, since they may be a different case. But, I think there are good things about arbitration from the consumer's end of things.

    First, arbitration as structured under the ebay user agreement is straight up, no funny business. The arbitration process is administered by the American Arbitration Association, which is pretty widely respected as being thoughtful and above-board in their management of the arbitration process. AAA does a good job of training arbitrators. AAA does not direct or control the outcome. Think of them as the clerks office at the courthouse. They manage the process, keep records, recruit and train arbitrators, but do not get involved in deciding the case.

    Keep in mind that an ebay transactions are likely to be small. A few dollars to a few hundred dollars. I'd guess that larger transactions are less common. How likely are you to hire a lawyer to file suit against eBay over their mishandling of a few hundred dollars? Would you really want to travel across the country for a day long trial over a $500 claim? Over a $100 claim?

    By providing for disputes to be resolved by arbitration the following happens:
    - The parties have a direct say in choosing the arbitrator. You can ding anyone on the list that you don't like the looks of.
    - The proceedings are informal and expedited. This reduces the cost of getting to trial, a trade-off which seems appropriate to me for a case of modest size.
    - The final hearing (i.e. the trial) takes place by telephone or is decided by written submissions. Again, would it be worth it to fly across the country to a trial over $500?

    AAA does not decide the case. The arbitrator decides the case. This distinction is important. Most arbitrators are experienced, and widely respected, lawyers who have a practice focused on the area of the law in which they hear cases. Many arbitrators are practicing lawyers, who do a small number of arbitrations. Some arbitrators are full time neutrals. An arbitrator obtains future work as an arbitrator only being acceptable to BOTH sides of a case. In my experience lawyers talk to each other. An arbitrator who gets a reputation for making bone-headed decisions on a case will quickly find him/herself out of work. An arbitrator who gets a reputation for being the pawn of one side or the other is done, end of career as an arbitrator. Similarly, an arbitrator who simply "splits the baby" and not really making the hard call of who wins/who loses under the law is also likely to find that he/she has not future assignments as an arbitrator. It is not unusual for me to be selected to serve as an arbitrator by a lawfirm where I have previously ruled against one of their clients in an earlier case.

    Yes arbitration does not provide the exact same trial process as a jury trial at the courthouse. But very few cases filed at the courthouse go to trial. Say, 5% or so. My experience in arbitration cases is that the vast majority of consumer arbitration cases do get to trial. There is genuine concern that we have created a litigation process so expensive that almost no one can afford it. Consumer arbitration under the AAA rules provides a way to get a small claim heard quickly, and at modest cost. I think this has real value.

    Some will say that the restriction of class actions means that big companies are free to lie, cheat and steal. I've seen a big company facing scores of consumer arbitration cases under rules very similar to those set by ebay. The company's cost of trying those cases is much higher than it would be under a class action. Plus, under a class action one trial and you are done with every one. In this process, the company has to try or set

  • by Anonymous Coward on Thursday August 23, 2012 @01:04PM (#41097693)

    I had this problem too after many years of buying junk on ebay, unfortunately many otherwise good sellers will only take paypal :(

    Solved by:
    -Call bank, create new checking account
    -(optional) create short name/nickname for account for use on website/apps/etc. (suggestions: "I hate paypal" or "paypal sucks" or "***** paypal")
    -Ensure this account is not linked to any other account in any other way at all. No overdraft, no protection, no nuttin'. Triple verify this with your bank, many will "helpfully" set these up by default.
    -transfer $25 or whatever minimum is to account
    -continue to use credit card on every purchase (paypal will use 5000 different website tricks to make sure this is not your default method, so you have to select it every time, annoying as hell but whatever)
    -$profit$ by not risking more than $25 to their crappy crooked methods

    The bank employee that did this for me over the phone was not surprised at all, they had done similar for people several times before.

"Never face facts; if you do, you'll never get up in the morning." -- Marlo Thomas