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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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  • by fuzzyfuzzyfungus ( 1223518 ) on Thursday August 23, 2012 @10:53AM (#41095591) Journal

    Does anybody else remember when kangaroo courts were something we associated with the commies?

    • I always associated kangaroo courts with Australians or perhaps Dr. Seuss []
    • The last class action suit I was involved in, I got a whole $5 check out of it, I can't even buy a pizza with that amount.
    • Amen to that...and will someone tell me again how these agreements don't violate the 7th Amendment []???

      • In theory, I can't imagine how they wouldn't.

        In practice? "While the amount mentioned in the amendment ($20) has not been indexed or adjusted for inflation, Congress has never extended federal diversity jurisdiction to amounts that small, and the amendment is one of the few portions of the Bill of Rights never to have been incorporated by the Supreme Court of the United States. Under the current Federal Rules of Civil Procedure (28 U.S.C. 1332), the amount in dispute in diversity cases must exceed $75,000 U

  • 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?

    • Re:so? (Score:5, Informative)

      by mark-t ( 151149 ) <markt@nerdfl[ ]com ['at.' in gap]> 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).
      • Yea, but still not sure how this is news...
        Every other EULA out there, has these same terms.

        It'd be like having service suspended for not paying your bill.

        • It'd be like having service suspended for not paying your bill.

          Except with eBay/PayPal, it's more along the lines of having your service suspended and the funds forcibly removed from your bank account (as well as taking anything that was still sitting in your PayPal account) without direct consent all because someone said you were a bad person and they didn't bother to get your side of the story. Sadly that isn't make believe and has actually happened. Many times.

          So it may not be news that a big company does this, but it is news that eBay is paving the way to abuse mor

    • by waspleg ( 316038 )

      They do now. It's stylish now. Even Valve did this less than a month ago. There is an NPR Diane Rehm show about this topic where one of the legal experts she's interviewing from George Washington University says that 93% of employer/employee contracts now have this in it too with the argument being "if you don't like it don't work there" ...

      • Re:so? (Score:5, Interesting)

        by waspleg ( 316038 ) on Thursday August 23, 2012 @12:15PM (#41097001) Journal

        Oh, and I forgot to mention that Al Franken has been trying to get the Fairness in Arbitration Act enacted by Congress for years now. It was filibustered the last time it went up for vote iirc.

      • Did you RTFA, it notes several other giants who do this same thing.

        it's actually pretty common anytime you sign something.
        Go look at the TOS with your bank, loans, electric company.

        If there is a dispute you agree to resolve it with arbitration. Granted it may unenforceable but that does not mean it's news when eBay follows an industry standard.

    • No, only a few. And in a great deal of countries, those sort of clauses have no value; the right to a class action suit (or any lawsuit) is something you cannot forfeit, so that clause's existance makes no difference.

  • That is, if you 'agree', then send a signed notice, will they drop you?

    More importantly, can you 'agree', participate in an auction, then drop out and then join a class action suit for the one auction you participated in before you dropped out?

  • Plague (Score:5, Insightful)

    by Microlith ( 54737 ) on Thursday August 23, 2012 @10:56AM (#41095661)

    I imagine it's already appearing on many more transitory agreements. Corporations now have an out, thanks to Scalia and his buddies, that protects them from the possibility that they'll ever get hit with a lawsuit big enough to actually threaten them. It puts each and every person that they fuck over out on their own and arbitration biases everything in their favor.

    I await the inclusion of anti-class action language in virtually all individual-facing contracts. It's virtually guaranteed to happen as there's no downside whatsoever for the corporations.

    • Re:Plague (Score:5, Interesting)

      by The Moof ( 859402 ) on Thursday August 23, 2012 @11:10AM (#41095895)

      I await the inclusion of anti-class action language in virtually all individual-facing contracts. It's virtually guaranteed to happen as there's no downside whatsoever for the corporations.

      The last time I checked, just about every contract or agreement I enter into has this clause already. This includes companies where I have no alternative due to a government-granted monopoly (my gas company and my electric company have both done this). So much for saying "no thanks" and finding an alternative...

      The really sad part is since corporations got away with this, I've actually started seeing companies slipping in waiving your right to any legal action, class action or individual lawsuit. I would say I'm waiting for the day that gets struck down in court, but knowing the current state of things, I'm not optimistic about it going our way (by 'our,' I mean us consumers and citizens).

      • The last time I checked, just about every contract or agreement I enter into has this clause already.

        And thanks to the Supreme Court, it actually has teeth. That's why every company out there is adding it to their consumer-facing agreements.

      • >>>government-granted monopoly (my gas company and my electric company have both done this). So much for saying "no thanks" and finding an alternative...

        (1) Tear down your house and build a PassivHaus. It requires no heating and only moderate A/C so you can screw the gas/electric company of thousands of dollars each year. (2) Move to a state that has gas/electric choice. You can switch to a company that doesn't block lawsuits.

    • Re:Plague (Score:4, Insightful)

      by Baloroth ( 2370816 ) on Thursday August 23, 2012 @11:10AM (#41095903)
      Do you have any evidence that arbitration actually biases it in their favor? The Federal Arbitration Act specifically states that for the arbitration to prevent entering court, it must be fair: at least as fair as going to court would be. In other words, if it actually is biased for the companies, they could be sued over that for violating the law. In other words, you can only have an arbitration clause in the first place if it is actually fair (IANAL, of course).
      • Re: (Score:2, Interesting)

        by Anonymous Coward

        The point made was: They get to pick the arbiter, and said arbiters prefer to rule in favor of those who will lead to continued work (ie the company being arbitrated against.)

        Hence it's basically the equivalent of a judge on the payroll. Sure they MIGHT rule against the big guy, but if so the damages will be so small that it's considered worthwhile in the company's case to provide proof that they're not being biased against the little guy (when it's obvious they are.)

      • 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.

        • You're wrong. They will usually "find for the plaintiff" to one degree or another. The purpose of arbitration is to avoid punitive(etc) damages in court and to deal with broad abuse on a case by case basis as a kind of firewall against a broad "assault" against widespread abuse. Arbitrators are good for businesses to deal with each other because they generally are "fair" to all parties involved, it's not good for business to consumer because what's "fair" is for you to get your money back and the busines
      • by RobertLTux ( 260313 ) <{gro.nitramecnerual} {ta} {trebor}> 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.

        • And again, the arbitration is legally binding under federal law if and only if it is fair. So an unfair result allows you to sue.
      • 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...

      • It is biased towards the corporation by definition. Number 1, the corporation has people on payroll who handle lawsuits and arbitration requests. As a result, an arbitration request is a wash for the corporation, but it still is a huge inconvenience for the individual. Number 2, arbitration is on average much, much cheaper for a corporation than a lawsuit. So cheap that it amounts to change found in the couch. However, arbitration is still a significant cost for all but the top 20% of the population.

        So who

        • The terms specify that eBay will pay the costs of the arbitration (so long as the judgment is under $10,000 dollars) unless it is deemed as frivolous by the arbitrator, so it won't cost the individual a dime in legitimate cases. Also they allow arbitration by telephone for under a certain amount (don't recall the exact figure), so it isn't even a terrible inconvenience.

          There is also the fact that if eBay really does start fucking over customers (more than they do already), people will find out and stop usi

          • By cost, I meant that people going into arbitration have to take PTO, they have to travel to the place of arbitration and actually study up on what is going on. And arbitration by telephone? That works only if it is something braindead that doesn't require any discussion of evidence. And it's funny that the arbitration costs only come into play for very small sums, which would indicate that the arbitration will be short and sweet. For anything more significant, you're on the hook for everything yourself.

            There is also the fact that if eBay really does start fucking over customers (more than they do already), people will find out and stop using eBay. The Internet is quite good at that.


    • by mark-t ( 151149 )
      I'n pretty sure that if the issue at hand for a possible lawsuit is on account of a threat to public health or safety, then any anti class action lawsuits clauses are not applicable.
  • 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 AF_Cheddar_Head ( 1186601 ) on Thursday August 23, 2012 @11:02AM (#41095743)

      You might be right about only the lawyers winning but the consumer has already lost if it gets to class action. In a system with forced arbitration the Corporation never loses and never has an incentive to fix a problem, at least with a class-action suit the corporation stands some small chance of losing and may attempt to fix the problem.

    • by Antipater ( 2053064 ) on Thursday August 23, 2012 @11:05AM (#41095811)
      Yes, because punishing a company for business practices that provoked 1,000,000 people to require legal recourse is something we never want to do. Also, I don't know which is worse, your spelling or the fact that you pay $50/person for lunch.
    • Class actions are less about justice but revenge.

      I would agree that legal fees, as a percentage of settlement, do tend to be excessively high in class action cases; but some perspective is in order:

      Because, as you note, the payoff for individual class members is fairly poor, consider why the class would participate: Because the alternative is nothing.

      If all litigation is on an individual basis, simply ensuring that you commit only malfeasance too petty to be worth court costs is de-facto legal; because who would go after you?

      Should a greater cut of the c

    • "Class actions are less about justice but revenge."

      Justice, punishment and revenge are nearly impossible to tell apart.. especially in the US judicial system.

    • by i kan reed ( 749298 ) on Thursday August 23, 2012 @11:09AM (#41095879) Homepage Journal

      Yes, but part of the point is the scummy company loses. Sometimes tort law isn't about recouping losses, but preventing unethical behavior in the first place. Frequently the classes of wronged people don't suffer much, but LOTS of people suffer. To me, it seems like a valid course for redress of grievances, and you shouldn't be legally allowed to sign away your rights.

    • by wbr1 ( 2538558 )
      It is not just about the money. Class action can also be used as a cudgel to change corporate behavior. It is one more weapon against heinous, negligent, and usurous actions.
      Sorry we cheated, used, and/or sickened thousands, but nya_nyaa you can't touch us.
      If you're not bent over yet, get ready for the rape. Don't worry, thete is plenty of TMZ and Fox News to distract you from the pain.
    • 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.

      I can understand your point about lawyers, but part of the whole idea of class action suits are to bring an offending company to task.

      Without class action, how else can that be done? Individual lawsuits? That has the burden of being able to afford to do such a thing in the first place, and the awards will never be large enough to act as a deterrent. Companies would just pay out and carry on. Prosecution by the state? That doesn't sound entirely appealing either, especially considering how cozy the governme

    • So without class action, what exactly is the reason a company won't try this:
      1. Overcharge all customers by $30.
      2. Refuse to refund the money.
      3. If anybody goes to the time and expense of suing them in small claims court, concede and refund the money and the 1 hours' worth of the attorney's time ($300 or so).

      This strategy is profitable so long as less than 10% of the customers affected don't go after them. And because it's not in fact worth my time to haggle over a $30 overcharge, chances are I won't. With

    • by Kjella ( 173770 ) on Thursday August 23, 2012 @11:28AM (#41096211) Homepage

      If you get $100 bucks you're lucky, my impression is that most are much lower. But as far as I understand, that's sort of the point of class action. Each person hasn't been harmed much and doesn't deserve a huge award, but if the company scams 1000000 people for $100 each they make a cool $100 million so the point is to punish the corporation. The problems are twofold:

      1) The class action lawyers don't act in their clients' best interest. They want to rack up as huge a legal bill as they possibly can, knowing each client is again too small to complain about it since s/he's 1/1000000th of their case. Either by spending time in court or more commonly by settling in a way that's favorable to the lawyers and unfavorable to everyone else. Class actions should be done on commission, if you want to get paid more you have to settle for more. That'd put the incentive back in the right place trying to extract as much money as possible for your clients.
      2) Extremely often the settlement doesn't actually involve cash, in involves a voucher or a discount for your next purchase even if you don't ever want to do business with them again. Not to mention people often never get around to spending them because they can't find anything they want to buy - even with the discount and it is forgotten or lost. Particularly for software the value is simply the sales value, it costs them nothing to churn out more copies. This could also be solved by requiring the payout be in cold hard cash.

    • by godrik ( 1287354 )

      which gives incentives to the company not to do shit that will get them involved.

    • by Hatta ( 162192 )

      Class actions are less about justice but revenge.

      Punishment is not revenge. The point of class actions is to deter future bad behavior. I don't care if a class action suit makes the lawyer a hundred million dollars and I get nothing. If it stops the behavior in the future it's done its job.

    • by qbast ( 1265706 )
      Class actions are supposed to be deterrent. If company has to pay $100 * 1000000 + legal fee, then they will think twice before pulling the same shit again.
    • The idea behind "the company loosing" is to de-motivate it and other companies to do the same.
      For example, if paypal takes everybody's money away to a total of 50M, and looses 100M in a class action lawsuit, they'll certainly think twice about doing it again. And so will other similar companies.

      In many cases, justice is about setting an example and de-motivating others from doing the same (bad) thing.

  • People complain about this all the time.

    Just don't use the site.

  • What ever happened to those? Or were they traded away at some point?

    Companies can put whatever they like in a EULA. Whether it will actually stand up to scrutiny is another matter.

    There's a reason why eBay is allowing people to 'opt-out' -- TBH, if there _was_ a problem, and you sent them a letter threatening to attempt a class-action anyway (and could prove the means to fight it), you'd probably get a personal settlement offer straight away. Nobody's going to want to risk an adverse ruling on a challenge,

    • by Desler ( 1608317 )

      Class action lawsuits are not an inalienable right. They exist due to rules created by the states and the Federal government.

    • by godrik ( 1287354 )

      There was a good deal on wall street, so we had sold it. Strangely, we can not buy it anymore. Where is the factory that produce those?

  • AFAIK no EULA or contract is above the law.
  • While they can force you into arbitration rather then a class action suit, you still have the right to sue them as an individual, that right has not been taken away.

    Of course, the costs involved are high, going up against a corporation with an entire team of lawyers is going to be very expensive, and they would most likely bankrupt an individual before anything ever makes it to trial. I also do not see to many lawyers taking this case on contingency as the potential to win is very very low.

    • by tomhath ( 637240 )
      I suppose you could file an individual suit, but the point seems to be having most disputes settled by arbitration rather than lawsuits.
  • 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.

  • I'm surprised Big-Pharma hasn't taken a chance to jump on this.
  • 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

  • I recently started selling on Ebay. Having previously used the account mostly for purchases, I never really worried much about feedback. When I began paying more attention to it, I realized that all my purchases were visible to others. This immediately pissed me off. My purchases were nothing unusual, but anyone could peruse them at will, potentially connecting them to my actual identity.

    I called Ebay Support and complained. They informed me that I could make my purchases semi-private, but it would disab
  • by Animats ( 122034 ) on Thursday August 23, 2012 @01:59PM (#41098403) Homepage

    Ebay insists you opt-out by paper mail:

    You must mail the Opt-Out Notice to eBay Inc., c/o National Registered Agents, Inc., 2778 W. Shady Bend Lane, Lehi, UT 84043.

    This appears to be somebody's house. []

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