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Microsoft Includes Arbitration Clause in Xbox 360 Update

by William Schwartz

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The Fall Xbox 360 Dashboard update has effectively been rolled out, and if you happened to read the ammended terms of use you may or may not have noticed the updated clause to limit liability for Microsoft.  Following the leads of others in the industry, Microsoft will be using these new terms to stop Xbox Live users from taking them to court in the event that something goes awry when using their service.

After the PlayStation Network debacle of earlier this year, Sony introduced the arbitration clause to PSN users, which would stop attorneys from forming class action suits in the event of privacy breaches or other mishaps on their network.  When signing on to the new dashboard for the Xbox 360, you’ll find that a new service agreement pops up that you must agree to.  The additional “Binding Arbitration Clause” states that:

“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.”

The problem that arises here is consumer rights, and having no legal protection from the company’s negligence.  While in most instances, lawyers are the only ones to make a bundle of cash on class action suits that Microsoft is trying to protect itself from, you do lose a considerable amount of protection.  Especially when you take into consideration that arbitrators usually arbitrate in favor of businesses, because businesses are the ones that pay arbitrators to oversee matters.  This practice also effectively sweeps problems under the rug.

These new terms of service only affect U.S. residents, but as was the case with Sony, if you do not agree with the terms of service that are set forth, you can opt-out by notifying Microsoft in writing within 30 days of signing the new agreement according to Kotaku.

UPDATED:  It turns out that you cannot opt-out of the new terms, as per Microsoft.  

“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.”   – Microsoft Spokesperson

 

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