Public Citizen Up in Arms Over New eBay Policy on Class Action Litigation

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Oct 8, 2012

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The Internet’s largest online marketplace, eBay, has more than 100 million active users, according to its site. So when it changes its policies, it affects a lot of people. A recent alteration to its user agreement, making it more difficult to pursue a class action lawsuit against the company, has consumer advocates up in arms.

According to eBay’s user agreement, “You and eBay each agree that any and all disputes or claims that have arisen or may arise between you and eBay shall be resolved exclusively through final and binding arbitration, rather than in court, except that you may assert claims in small claims court, if your claims qualify.” 

Consumer rights group, Public Citizen, has deemed the restriction on class action litigation “underhanded.” They say the policy that limits anyone with a legal claim to arbitration, forcing them to settle the issue without the option of a court-mandated resolution, “disproportionately favor[s] the company in disputes,” according to this article. The group is taking action through a petition to have the policy reversed. 

In Defense of Arbitration-Only Clauses

Arbitration-only clauses are not uncommon these days. Some cellphone and other digital communications companies have recently reconfigured their litigation policies to include similar restrictions. And the Supreme Court upholds the right of companies to do so. Proponents of arbitration-only agreements say that it saves cosumers from expensive litigation to have their complaints resolved. 

“The arbitration provision encourages swift and reasonable resolution as opposed to litigation that can be protracted, expensive and often dissatisfying to customers,” said an eBay representative, according to Cnet. “We believe this approach will benefit both eBay Inc. and our customers.” 

Why Arbitration Clauses Are Bad

Critics of arbitration-only agreements maintain that by limiting claims to one person only, instead of hundreds or even thousands of people with the same complaint, makes it more difficult to force a company to address complaints and correct problems for the benefit of all consumers. 

Class actions are a way for individual consumers to stand up to massive corporations like eBay in legal disputes. They come with more financial backing, larger legal teams, more power in numbers, and often more public awareness. These elements level the legal playing field, and without them, one person does not have many options if arbitration doesn’t yield an acceptable resolution.

Public Citizen find eBay’s “opt-out” provision especially offensive, which does offer the option to opt out of the arbitration agreement, but requires a snail mail response instead of allowing users to make the change online. The group sees the move as a disingenuous way of appeasing upset consumers, and they feel the new policy should be entirely removed from the user agreement. 

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