During the weekend, I spent some time reading the new Microsoft Services Agreement, which includes a clause prohibiting users from suing the company in a class-action lawsuit. Microsoft updated its agreement on August 19, 2012 and the new clauses wnet into effect on October 19. 2012. The new no-class-action clause is important because it affects consumers' rights to sue collectively.
The updated agreement:
"IF YOU LIVE IN THE UNITED STATES, SECTION 10 CONTAINS A BINDING ARBITRATION CLAUSE AND CLASS ACTION WAIVER. IT AFFECTS YOUR RIGHTS ABOUT HOW TO RESOLVE ANY DISPUTE WITH MICROSOFT. PLEASE READ IT... "
If you use any of the following Microsoft services, then this applies to you: Microsoft Hotmail, Microsoft SkyDrive, Microsoft account, Windows Live Messenger, Windows Photo Gallery, Windows Movie Maker, Microsoft Mail Desktop, Windows Live Writer Bing, MSN, Office.com, and any other Microsoft products or services that refer to this service agreement. A portion of the new clause:
"This section applies to any dispute EXCEPT IT DOESN'T INCLUDE A DISPUTE RELATING TO THE ENFORCEMENT OR VALIDITY OF YOUR, MICROSOFT’S, OR EITHER OF OUR LICENSORS’ INTELLECTUAL PROPERTY RIGHTS. The term “dispute” means any dispute, action, or other controversy between you and Microsoft concerning the services (including their price) or this agreement... In the event of a dispute, you or Microsoft must give the other a Notice of Dispute, which is a written statement that sets forth the name, address, and contact information of the party giving it, the facts giving rise to the dispute, and the relief requested. You must send any Notice of Dispute by U.S. Mail to Microsoft Corporation, ATTN: LCA ARBITRATION, One Microsoft Way, Redmond, WA 98052-6399, US. A form is available on the Legal and Corporate Affairs (LCA)website..."
This is also important for several reasons. First, because it limits consumers' rights. Class-action lawsuits are one method available to consumers when state, local, or federal laws provide no or insufficient protections. Examples include new marketing programs or data breaches that fail to protect users' sensitive personal information.
Second, Microsoft is one of several companies that have included no-class-action lawsuits in their service agreements. The MediaPost Daily Examiner reported:
"Since the Supreme Court upheld AT&T's mandatory arbitration clause last year, more and more tech companies -- including Netflix, eBay, and Paypal -- are revising their terms of service to provide that consumers have no right to bring class-actions."
Of course, companies have a write to add clauses into their agreements, where allowed by federal, state, or local laws. And consumers have a right to accept or reject new clauses like this.
Companies with no-class-action clauses are effectively saying publicly that they want to limit their liability when bad things happen. For consumers that prefer products andr services that stands by their users when bad things happen, this new clause means you should shop around for an alternative.
What is your opinion of the new clause?