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New Xbox 360 TOS Seeks To Block Class Action Lawsuits

New Xbox 360 TOS Seeks To Block Class Action Lawsuits

December 7, 2011 | By Eric Caoili

Mimicking Sony's move to block class action lawsuits from PlayStation Network users, Microsoft updated its Xbox 360 terms of services to prevent U.S. owners from taking the company to court.

In its major dashboard update rolled out for Xbox 360 yesterday, Microsoft amended the TOS that all owners must agree to before using the console, adding new language purporting that they are giving up their right to file lawsuits against the platform holder.

The new TOS section reads:
"If you live in the United States, you and Microsoft agree that if you and Microsoft do not resolve any dispute by informal negotiation ... any effort to resolve the dispute will be conducted exclusively by binding arbitration in accordance with the arbitration procedures in Section 18.1.7.

You understand and acknowledge that by agreeing to binding arbitration, you are giving up the right to litigate (or participate 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."
It also includes a clause claiming that users are waiving their rights to join an Xbox 360 class action lawsuit targeting Microsoft. The company has suffered several class action suits over the years, most recently over alleged double-billing on Xbox Live.

By limiting consumers' ability to join class action lawsuits, Microsoft could potentially save itself a significant amount of money, as it would pay only a fraction of individual users affected by a particular issue, instead of the millions who could opt into a class action.

Sony instituted similar language into its PSN terms three months ago with a new "Binding Individual Arbitration" section, though it also offered an option allowing users to opt-out of the clause by sending a physical letter to the company.

It pointed to a recent controversial Supreme Court ruling -- allowing AT&T to block employees from filing class action suits against the carrier -- to explain its decision: "The Supreme Court recently ruled in the AT&T case that language like this is enforceable."

"The updated language in the TOS is designed to benefit both the consumer and the company by ensuring that there is adequate time and procedures to resolve disputes."

Sony notably updated the terms five months after a federal class action suit was brought against the company for a security breach exposing users' personal information to hackers that attacked the company's online services, including PSN, earlier this year.

Several state governments aren't comfortable with these kind of clauses, though, as Kotaku points out. Illinois has ruled that consumers must always have the right to pursue legal action, and Ohio and New Mexico are both currently investigating the issue.

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