The Clause: Agreeing to Binding Arbitration & Class Action Waiver [Paragraph 20.3 (a-i)]
Any dispute you may have relating to your use of Pay By Mobile services may be resolved either through informal negotiation or in small claims court (in NY, small claims may not exceed $5,000). However, if those fail or are otherwise insufficient forums for handling your claim, you are now expressly required to resolve your dispute through binding arbitration. The clause states this succinctly: “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.” It also provides that all claims must be filed, in small claims court or arbitration, within one year from the date on which it could first be filed.
Arbitration clauses are common enough and, for general purposes, they’re not necessarily a bad thing: most people will not need to litigate an expensive claim arising out of Pay By Mobile. The costs of a lawsuit in time and resources often outweigh the value of the harm to the individual. You’ll probably get more out of a negotiation or small claims proceeding than you would if you put your claim to the test before a court of law.
The class action waiver is more controversial. The class action is one of the most effective legal options for consumers to settle disputes against large service providers. Essentially, a class action enables consumers who have been wronged in the same way to join together in a lawsuit. By bringing together a mass of small individual claims, consumers who have been harmed can seek redress while keeping their own, and the court’s, costs down.
The new section does contain an “opt out” by which, after agreeing to the present Terms, you can reject future changes to the Terms by sending notice to Skype through US Mail. However, you will remain subject to the Terms to which you’ve already agreed - it’s not a true “opt out” since you have no choice but to opt into the current Terms.
Since these provisions are written by companies on a take-it-or-leave-it basis and significantly affect your rights, there is a risk that they could be found by courts to be unconscionable. Other companies that have recently added binding arbitration to their Terms - like EBay, Instagram and StubHub - have provided their customers with a limited window to opt out completely. Because Skype hasn’t offered such an opt out, they appear to be somewhat uncertain of the legality of this tactic. They seem to have hedged their bets by adding a severance clause, which would effectively strike from the contract any clause in 20.3 that was found to be illegal or unenforceable. It’ll certainly be interesting to see if any legal challenges arise from the the lack of an opt out clause, and whether Skype will be forced to retroactively give their customers the option.
So, all you Skypers out there using Pay By Mobile - what say you? How does it feel to know that if one day you discover you’ve been subjected to unreasonable or fraudulent practices, that your only remedy will be before an arbitrator who’s been exclusively retained by Skype? There’s not much hope that lawmakers in the courts or capitals will force companies like Skype to sit its customers at the bargaining table. For now, keep your eyes open to the effects of these provisions and let your voices carry your opinions loudly. They can’t contract away your right to be heard - and, after all, you can always opt out completely.