Sony has become the latest company to force its users into a binding mandatory arbitration (BMA) agreement through a change in its terms of service, effectively removing customers' right to collectively sue by preventing them from using PlayStation 3 consoles online if they do not agree.


The change in the company's terms of service comes months after the PlayStation Network (PSN) service was taken down for nearly a month once they discovered the theft of over 77 million users' personal information, including credit card details. The hack, which it blamed on activist group Anonymous, cost Sony billions. Members of Anonymous said they were not involved.

The new terms of service explains that any dispute be addressed by an arbitrator chosen by Sony, who will only step in on an individual basis. Customers give up any and all rights to join class action lawsuits against Sony.

Typically when disputes arise under BMA agreements, firms almost always find for their employers.

PSN users do have the right to opt-out of the agreement by sending a letter to Sony, but most users are likely to ignore the terms of service entirely and simply agree.

Sony is just the latest company to adopt arbitration provisions in their terms of service. AT&T earlier this year won a landmark Supreme Court case by a 5-4 vote that makes this very practice legal nation-wide, in a decision that had legal scholars predicting the end of class action lawsuits.

AT&T was supported in the case by the nation's largest business lobbying group, the U.S. Chamber of Commerce.

A 2007 report [PDF link] by consumer advocacy group Public Citizen looked at 34,000 arbitration cases in the state of California over an eight-month period and found that the largest BMA company retained by the credit card industry decided in favor of corporate interests 94 percent of the time. Out the 34,000 arbitration proceedings, corporate clients initiated all but 118 of the cases.

“Binding mandatory arbitration is a systematic, privately funded denial of justice for consumers," Public Citizen's Laura MacCleery said in a media advisory. "It is a get-out-of-jail-free card for corporate hucksters."

(H/T: Ars Technica)