This week Microsoft debuted the newest iteration of the Xbox 360 Dashboard and along with that came a new Terms of Service (ToS) agreement. In that ToS, Microsoft has put in a clause requiring you to agree to neutral arbitration of all disputes. That means you can't just drag Microsoft into court if you feel they have wronged you.
The relevant clause in Microsoft's new ToS reads,
" YOU UNDERSTAND AND ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION, YOU ARE GIVING UP THE RIGHT TO LITIGATE (OR PARTICIPATE IN AS A PARTY OR CLASS MEMBER) ALL DISPUTES IN COURT BEFORE A JUDGE OR JURY. INSTEAD, YOU UNDERSTAND AND AGREE THAT ALL DISPUTES WILL BE RESOLVED BEFORE A NEUTRAL ARBITRATOR, WHOSE AWARD (DECISION) WILL BE BINDING AND FINAL, EXCEPT FOR A LIMITED RIGHT OF APPEAL UNDER THE FEDERAL ARBITRATION ACT. ANY COURT WITH JURISDICTION OVER THE PARTIES MAY ENFORCE THE ARBITRATOR'S AWARD."
The ToS has another relevant paragraph which forces you to give up your right to participate in class action lawsuits against Microsoft. It's worth noting that these clauses only apply to users in the U.S. Some states are actually investigating how legal it is to include clauses like these in ToS agreements. Illinois has actually put their foot down and decided to protect the rights of consumers and their legal options and Ohio is currently looking into similar options.
Microsoft is not the first console manufacturer to add these types of clauses into their ToS agreement. Sony also did this in a recent version of the PS3 firmware. What is different about Microsoft's ToS is there is no ability to opt out of these specific clauses. In the case of Sony, writing a letter to the company expressing that you wish to opt out would effectively maintain your rights to sue the company (or participate in class action lawsuits), we think.
Microsoft has confirmed to Kotaku that there is no way to opt out of this part of the their ToS. Their statement said,
"Users must agree to the new clause to the Terms of Use in order to continue using Xbox LIVE. Changes to the Terms of Use are designed to ensure that our customers have an easy way to file a dispute without requiring formal legal action. They may now bring a dispute to our attention by filling out a simple Notice of Dispute form found at www.xbox.com/notice and mailing in documentation in support of their claim. We will then work to resolve the dispute to their satisfaction within 60 days. Any customer unsatisfied with the outcome of this informal process may easily initiate arbitration with the American Arbitration Association.
Customers may also choose to bring their claims in their local small claims court if they meet the normal jurisdictional requirements. For detailed information, please visit: http://www.xbox.com/en-US/Legal/LiveTOU"
Apparently the terminology in the ToS itself allowing you to "opt out" will only apply to future changes to this agreement, according to Kotaku's story.
Hopefully more states will join Illinois in protecting consumer rights. These kinds of agreements seem so one sided and remove the rights of consumers. Let us know what you think in the comments?
