How Companies Are Limiting Your Ability to Sue

Photo (cc) by walknboston

A couple months ago, many Facebook users got an email notification about an option to join a class-action settlement against the company and get up to $10. (Yeah, that was real.) Facebook’s obviously one company that hasn’t blocked that possibility, but several have.

DailyFinance writes that in the last couple of years, Sony’s Playstation Network, Microsoft’s Xbox Live, and Netflix have all changed their terms of service to prohibit class actions.

These companies have faced such lawsuits before. Xbox was sued over wrongly banning users and taking their credit away; Sony was sued over its huge data breach; Netflix was sued over storing users’ rental histories.

Now, instead of a class action lawsuit, users would have to take the companies on one-on-one through arbitration. And DailyFinance predicts non-tech companies will soon get in on the game…

It’s easy for tech companies, websites and wireless carriers to insert arbitration clauses into their contracts, because people are used to skipping the terms of service agreements and fine print that accompany these services.

But now that the Supreme Court has given the go-ahead to forced arbitration clauses, what’s to stop fast food restaurants, pharmaceutical giants, car manufacturers and other businesses from using the same tactic?

Here’s a list of companies that require arbitration and ban class-action suits. Some of them allow you to opt out of that provision within a certain timeframe of signing up, so take a look whenever you start doing business with someone new.

If you want to learn more about how arbitration works, The Financial Industry Regulatory Authority has a good overview. But the main reason arbitration is the preferred corporate method of dealing with disputes is arbitration panels tend to favor them.

In addition, without the ability to band together with other consumers in a class action, taking companies to an arbitration is prohibitively expensive. And finally, without the big judgments offered by class action suits, changing bad corporate behavior becomes much more difficult.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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