Paypal policy update: No class-action suits

https://cms.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=ua/upcoming_policies_full

by ajw0100 • 14 years ago

107 71 14 years ago

cms.paypal.com

siscia• 14 years ago

it is legal ?

randomchars2• 14 years ago

Let's start a class-action lawsuit to challenge it.

ChuckMcM• 14 years ago

Probably, see: http://usatoday30.usatoday.com/news/washington/judicial/2011...

bovik• 14 years ago

"Scalia was joined in AT&T Mobility v. Concepcion by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito."

Big fing surprise.

bradleyland• 14 years ago

IANAL, but it's hard to sign away your right to tortious remedy like this (in most cases). At least in the way we think of it.

Even if you could sign away your right to sue, these are contracts, so things aren't so black and white. We're talking civil law here, which means even if you did sign away your right to sue, you could sue anyway. You'd break the contract, which would open you to counter-suit, but hey, we're all lobbing grenades at that point, so why the hell not, right?

For context, I'm currently being sued for something that every attorney I talk to says is a "total bullshit suit", yet it's been going on for two (almost three) years now.

ajw0100• 14 years ago

I wonder if this is part of David Marcus' plan to "radically change" paypal and "earn your trust again"...

http://ndy.gd/JJgB

edit: added trust quote.

yuhong2• 14 years ago

Well, class action suits itself are not free of problems.

rayiner7• 14 years ago

They're not, but they're a solution to a basic structural problem in the law. In countries like the US that depend on private suits to accomplish what in some other countries would be done through government enforcement actions, it becomes possible to profit by screwing over a large number of people for a small amount each. If that amount is less than a threshold, it becomes unprofitable to litigate, and only a few such claims will be brought, far less than the actual damages caused by the company.

paulgb4• 14 years ago

It's interesting in contrast to the way Microsoft does it, as explained by grellas here: http://news.ycombinator.com/item?id=4460843

They're similarly restricting class action suits, but doing so in a way that comes off as quite generous.

kiskis• 14 years ago

I'm from Europe and I don't really getting it.

If you start a class action lawsuit, the best thing PayPal can do is to sue you for contractual non-performance. At least in Europe, even if the contract say that you won't file a lawsuit, the court will throw that part of contract out, usually for constitution terms.

So is this legal in the US? How many of your constitutional rights can you give up in a contract in the US?

aidenn0• 14 years ago

IANAL, but while you cannot totally give up your right to sue, you can voluntarily restrict it.

For example, you can agree to resolve disputes in binding arbitration, and then you could only sue on the grounds that the arbitration was in some way unfair.

Similarly you can agree to not take part in a class-action suit, while still being allowed to sue as an individual.

Now that only applies to contracts that are negotiated. Contracts of adhesion (a non-negotiable contract when there is a disparity of power, like an EULA between you and Microsoft) have a lot more restrictions.

It looks like Pay Pal is trying to get around this by allowing users to opt-out, thus making it negotiable. I'm not sure if there is precedent for that. Those who are actually lawyers might know.

rayiner7• 14 years ago

> So is this legal in the US? How many of your constitutional rights can you give up in a contract in the US?

In the US, the general rule is that you can give up your Constitutional rights via contracts. It's, e.g., the basis for our criminal justice system, where plea bargaining (which is the criminal analogue of a civil settlement contract) is used in almost all cases despite a Constitutional right to a jury trial.

andyjohnson0• 14 years ago

"In the US, the general rule is that you can give up your Constitutional rights via contracts"

Thats astonishing.

I see from your profile that you are a lawyer, so I'll ask. Are there any limits to the rights a person give can give up? Could they, for example, voluntarily sign a contract that irrevocably places them in servitude to someone else (13th amendment)?

DannyBee2• 14 years ago

To put it simply, class action lawsuits have never been a constitutional right in the US.

In fact, in the US the notion of class action lawsuits and the rules around them were completely imported into US law (in a very weird way) by the judiciary. Even then they were skeptical.

Wikipedia actually has a reasonable history of what happened here in the US (or at least, it is similar to what i learned in law school).

You aren't actually contracting away any constitutional rights here, which is one reason why they allow it (though you can actually contract away constitutional rights in some cases)

Even the binding arbitration part is allowed, as per the Federal Arbitration Act (which has been upheld several times).

You can appeal the arbitration, just not on most substantive grounds (which sucks, but c'est la vie).

squarecat2• 14 years ago

http://hothardware.com/News/Appeals-Court-Reverses-Decision-...

tl;dr

The issue in question was whether or not Dell's Terms and Conditions of Sale could legally force the company's customers to settle disputes through arbitration rather than in a court of law. This is the second time in recent history that the ninth circuit has found such arbitration clauses unenforceable due to the unconscionable burden they place upon the purchaser.

...

The court based its ruling in Omstead v. Dell directly upon an earlier case, Oestreicher v. Alienware, in which Alienware (a Dell subsidiary) attempted to force Mr. Oestreicher into arbitration. In that decision, the court wrote that the Alienware contract was unconscionable because it was a "contract of adhesion." A contract of adhesion is a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party [the customer] only the opportunity to adhere to the contract or reject it.

rayiner7• 14 years ago

I love the 9th Circuit.

eli• 14 years ago

IANAL, but wouldn't the Supreme Court's subsequent ruling in the AT&T case supersede that? http://www.npr.org/2011/04/28/135785797/supreme-court-impose...

bragen• 14 years ago

Courts have avoided Concepcion with surprising frequency by holding that it did not preempt ordinary unconscionability rules.

There's a pretty good round up of illustrative opinions here: http://www.uclpractitioner.com/2012/03/new-opinions-interpre...

JoshTriplett• 14 years ago

The court did not rule the contract unconscionable because it was a contract of adhesion. They ruled that it was both a contract of adhesion and unconscionable, the combination of which made it unacceptable to the court. "Take it or leave it" remains perfectly acceptable, unless combined with unconscionable terms.

RollAHardSix• 14 years ago

"unconscionable because it was a "contract of adhesion." A contract of adhesion is a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party [the customer] only the opportunity to adhere to the contract or reject it."

Side note...that reminds me of my Military Service contract with the Government.

But this is good, giving up your right to sue is not something that should be allowed in Terms and Conditions...now a separate agreement that still wouldn't preclude using the service/material/item in question, perhaps there is room for that.

jamesaguilar2• 14 years ago

Sue in small claims court? I thought part of the point of class actions were to make things cheaper for defendants by only having to defend one case instead of thousands.

jrockway2• 14 years ago

Binding arbitration is even better for defendants, though, since all they have to do is pay their friend the arbitrator to rule on their side. There are no checks and balances, no jury of your peers, no appeals process, and no reason for the arbitrator to ever side with you. If you sign a contract that includes a mandatory binding arbitration clause, it means one thing: the other side intends to violate the contract.

pc862• 14 years ago

I'm familiar with your history on HN and your work with open source and appreciate both, so please do not take offense to this.

You are completely and totally wrong about everything you just said. I run a business and every client signs a contract agreeing to mandatory binding arbitration. Why? Court cases are expensive, and most of my clients are attorneys themselves or have significantly more resources than I do.

Both sides agree on an arbitrator and each side pays 50% of the fee. Arbitration is not some back room circle jerk where the defendant gives the arbitrator a couple hundred bucks for a favorable ruling, and the notion that it is is offensive to people like me who rely on that option. And guess what? If the arbitration was like that, you're within your right to sue.

jamesaguilar2• 14 years ago

I don't think the corp gets to choose the arbitrator, which essentially invalidates all of your logic on this one.

paulgb4• 14 years ago

> Unless you opt out: (1) you will only be permitted to pursue claims against PayPal on an individual basis

So, you can opt out. But they will retain a herd immunity of sorts -- as long as a critical mass of users doesn't opt out, a class action can never gain steam. Clever.

Incidentally, has anyone managed to opt out? I can't figure out how to (the new TOS doesn't even show up for me, so it may be that non-US users are not affected)

illicium• 14 years ago

From the Policy Updates page:

Opt-Out Procedure.

You can choose to reject this Agreement to Arbitrate ("opt out") by mailing us a written opt-out notice ("Opt-Out Notice"). For new PayPal users, the Opt-Out Notice must be postmarked no later than 30 Days after the date you accept the User Agreement for the first time. If you are already a current PayPal user and previously accepted the User Agreement prior to the introduction of this Agreement to Arbitrate, the Opt-Out Notice must be postmarked no later than December 1, 2012. You must mail the Opt-Out Notice to PayPal, Inc., Attn: Litigation Department, 2211 North First Street, San Jose, CA 95131.

The Opt-Out Notice must state that you do not agree to this Agreement to Arbitrate and must include your name, address, phone number, and the email address(es) used to log in to the PayPal account(s) to which the opt-out applies. You must sign the Opt-Out Notice for it to be effective. This procedure is the only way you can opt out of the Agreement to Arbitrate. If you opt out of the Agreement to Arbitrate, all other parts of the User Agreement, including all other provisions of Section 14 (Disputes with PayPal), will continue to apply. Opting out of this Agreement to Arbitrate has no effect on any previous, other, or future arbitration agreements that you may have with us.

nym• 14 years ago

I'm glad they make it so easy!

paulgb4• 14 years ago

Thanks. I found an easier way -- deleting my PayPal account.

pnathan• 14 years ago

I read through this this morning and was like, "Wow, so many people are not going to go through the hassle of mailing the notice".

Stay classy PayPal. :-/

gnu8• 14 years ago

I am opting out by emailing the first @paypal.com address I can find. I have altered my agreement with paypal to the effect that notifying them in this way is permissible.

Monotoko• 14 years ago

There is one good thing about the method they've chosen...if you could rally up tens of thousands of PayPal users, they would be swamped.

rayiner7• 14 years ago

How is this even legal?

knieveltech• 14 years ago

Until a judge rules it binding, it isn't. It's just a bunch legal verbiage.

notimetorelax• 14 years ago

This is something I don't get about these clauses in contracts. Law should supersede any private contract otherwise what's the point of having such law?

rayiner7• 14 years ago

Laws create private rights, and those rights can be contracted-away. Say the securities laws create a private right of action for people who make misrepresentations on a prospectus. If you're an investor who buys a security from a shady issuer, you can choose to sue or not. The law just creates a right of action, it doesn't force you to use it. The law views contracts to give up that right of action as being just a part of your discretion in exercising that right.

Obviously a contract can't protect a company from, say, criminal enforcement by the SEC, because that's a right held by the government, not the injured individuals.

pserwylo• 14 years ago

I've often thought about this. Specifically, if you want to play a game of paintball or some other physical activity, there is often a waiver you sign which says something along the line of:

"you agree not to sue if you injure yourself, even if it was due to our negligence... "

When I sign it (because I can either agree, or not play the game of paintball with my mates), I just do so on the basis that a clause like that wouldn't hold up very well.

kahirsch• 14 years ago

The Federal Arbitration Act of 1925 - http://en.wikipedia.org/wiki/Federal_Arbitration_Act

zengr• 14 years ago

Visa has the same policy: https://www.palmettocitizens.org/info/visa.html

rsync• 14 years ago

Absurd. Think of what a class action lawsuit is, in its bare form - it is a form of free speech - a peaceable assembly.

I dislike runaway litigation as much as anyone, blah blah blah, but you can't keep me from peaceably assembling for whatever reasons I see fit.

Tipzntrix• 14 years ago

I've started seeing these on my Visa card as well, about 1 month ago. I wonder which one tipped the other off about it, or which case made this so sensitive to these large companies.

zacharyvoase• 14 years ago

As a non-lawyer, I'd be interested to know if existing Paypal customers in the US can request a declaratory judgement on the enforceability of the arbitration clauses. I feel there would be a beneficial chilling effect on service providers if customers could bring class-action suits for declaratory remedies about adhesive and unconscionable/inequitable terms of service—that is, without having to first breach the terms of the contract (which could only happen on an individual basis and in which case the playing field would be massively un-level).

magoon• 14 years ago

Words on a page.

hmottestad• 14 years ago

I would like to find the first form on their page, find out where it posts to and post my opt out there. If the web server responds with a 200 OK then I know they got it so I have opted out and received a confirmation that they got my message.

Also I don't need to do this, because I'm in Norway and I have no reason to join an American class action suit and in Norway you can't sign away your rights in this manner.

fnordfnordfnord• 14 years ago

FnordFnordFnordCo LLC Policy update. This update to the User Agreement effective ca. many years ago. contains changes that affect how claims you (PayPal) and FnordFnordFnord have against each other are resolved. You (PayPal) will be used only as a last resort. Pretty much if there is any alternative better than a carrier pigeon, it will be used.

ghaste• 14 years ago

Netflix, just this week added a similar EULA...

jamesbritt• 14 years ago

Netflix annouunced that some months ago in the US. Are you just seeing it now?

For some time I was getting a page banner on netflix.com telling I had to go agree to this. I never did. I keep expecting them to cancel my service. Perhaps they went and agreed for me.

ams6110• 14 years ago

Contracts only mean what the courts say they mean. And if your only agreement is a "yes" typed into a text field or a checkbox clicked, probably mean even less than that.

krob• 14 years ago

That's okay, seriously. I have no intention of ever using paypal ever again. Case closed. I wonder how many new customers this is going to loose them? Only time will tell.

fiendsan• 14 years ago

Oh no and paypal said they were changing... yeah like 99% of paypal users have the time and money to sue paypal individually, yeah change...

xuhu• 14 years ago

So where is the webpage that takes your Name, Address, paypal Email, and sends the opt-out letter for you, for $0.99 ?

randomchars2• 14 years ago

Paid via Paypal of course.

Though I'm not sure if it would be possible because you need to sign the letter.

ludovicurbain• 14 years ago

Am I the only one surprised with the widespread use of "IANAL" as an abbreviation ?

Paypal policy update: No class-action suits

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