By Ben Chynsky
Earlier this year Sony’s PlayStation Network was attacked by a string of hackers that compromised the private data of as many as 100 million many users’ accounts. Sony issued apologies, offered some compensation packages, and promised to strengthen its security network. At the same time, Sony was subject to a number of lawsuits including some class-action filings. One class action lawsuit filed against Sony in April could ultimately cost the company billions of dollars.
It is no coincidence that Sony quietly updated its PlayStation Network Terms of Service (“TOS”) agreement last week. The company added a new section to its TOS that will prevent users from joining together in the future in any class-action lawsuits against the company. It also provides for binding arbitration as the sole means of dispute resolution with the company before any lawsuit is brought. The new section was not announced by publicly Sony. However, users on game forums and gaming blogs quickly voiced their discontent.
The new section requires users to agree that they will not join any class-action suits against Sony in the future. Furthermore, the new section states that if a user does file a suit against the company, it must be done on an individual basis through an arbitration procedure with a Sony-picked arbitrator. Any customers who do not want to agree to the new section must send Sony a written letter within 30 days. If users do not agree, then their PS3 will not be able to get online or purchase media content from Sony. A Sony spokesman stated that the section was designed to simply ensure adequate time and procedures to resolve future disputes.
The larger story here is that forced arbitration is increasingly utilized by large corporations as a means to avoid complicated class-action lawsuits Class-actions lawsuits are expensive for these corporations, take significant amounts of time and resources, and ultimately can result in large cash payouts. On the other hand, the loss of the ability to bring class actions suits is a significant detriment to the autonomy of these consumers. These consumers no longer have the same power to unite against a massive corporation, and instead must agree to binding arbitration in which they are undoubtedly at a disadvantage from the beginning. Then again as one user on a game forum put it, “I didn’t read it, I accepted it blindly. I am grateful to my Sony overlords for allowing me to buy and use their products.”
Tags: Sony Playstation