Public Citizen Raises Alarm (And A Petition) Against eBay’s Updated Policy On Class Action And Litigation

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If you are a regular eBay user, chances are that you are not constantly getting burned in your sales transactions, but for those who do run into trouble, it’s good to know that you have options for how to deal with it. That appears to be changing, though. The site in August updated its user agreement and privacy policy, adding in new clauses that change how users can bring lawsuits related to eBay sales — in particular restricting the ability for users to bring class action lawsuits against eBay.

Now the company’s facing the wrath of Public Citizen, the consumer advocacy group, which has written an open letter and started a petition asking eBay to reverse its policy on class action suits and to update other elements of the user agreement that make it more difficult for users to take grievances to court, if they come to that.

Public Citizen is also asking that eBay remove a clause that requires users to mail in written requests to opt out of another provision for forced arbitration — effectively a clause that restricts how users can take legal action against eBay if they have a grievance over company misconduct.

To be clear, this is just a public calling out, not a legal action in itself. Public Citizen is known for taking big companies to court over issues like online free speech — it won cases against WalMart and Koch Industries in this area. The petition is one way of testing out just how big a deal the eBay changes are for consumers, and while it may help to persuade eBay to change its policy, it could also serve as a call to action if it doesn’t.

Public Citizen describes writing a letter and sending it through the mail a “strange requirement for a company whose entire business platform is online.”

“To put it charitably, eBay’s requirement that opt-outs be submitted through traditional mail raises questions about the sincerity of its commitment to permitting users to protect themselves,” Robert Weissman, president of Public Citizen, writes in the letter.

But in the meantime, for those who are signing the petition and want to opt out of the forced arbitration amendment, Public Citizen’s offering a form letter that you can download and print out to send via snail mail.

Public Citizen notes that even if the arbitration clause does not get removed, it hopes that “at least” it gets rid of the provision that prohibits class action lawsuits. “Especially for low- and moderate-dollar disputes, the prohibition on class actions effectively bars users from taking any formal action at all,” Weissman writes in the letter.

The key bit of eBay’s policy on class actions is this (the caps and bolding are eBay’s from its user agreement):

YOU AND EBAY AGREE THAT EACH OF US MAY BRING CLAIMS AGAINST THE OTHER ONLY ON AN INDIVIDUAL BASIS AND NOT AS PART OF ANY PURPORTED CLASS OR REPRESENTATIVE ACTION OR PROCEEDING…

It’s not clear but it appears that eBay’s ability to restrict class action may come from this ruling from the Supreme Court last year on the matter. The company has been the subject of at least one successful class action lawsuit in the past, so this may also be behind this development.

The new provisions have already come into effect for new users; and they are due to take effect for existing users on October 10. They appear to apply to users only of eBay.com, although we have seen that they will also be extended to PayPal, too come December. It’s not clear whether operations in other countries like the UK are also affected. We have reached out to eBay for a response and will update this post as we learn more.

Update: eBay’s response, in which it notes that its changes are to improve the time for resolutions.

eBay recently updated its User Agreement to provide clarity around our policies and stay current with changing laws as our business and service offerings evolve. The arbitration provision encourages swift and reasonable resolution as opposed to litigation that can be protracted, expensive and often dissatisfying to customers. We believe this approach will benefit both eBay Inc. and our customers. eBay has provided users with the option to opt out of the arbitration provision if they do not feel it is right for them and their account will remain active

The spokesperson also notes this also provides a route out of the second part of the provision having to do with class action: “By opting out of the arbitration provision, a user opts out of the class action waiver.” It’s still a question, though, of whether eBay’s changes are obvious and easy to refrain from for users.

And another response from Christine Hines, Public Citizen’s Consumer and Civil Justice Counsel:

“We want to help eBay users to be aware of and understand the company’s recent actions, that it is squashing their rights with these provisions. The petition will also help in informing the company of its users’ disapproval of this new policy.  eBay also tells users they can opt out of the arbitration clause but then requires them to send a letter to the company by mail….it was a strategic decision because eBay knows that most of its users are not going to send a letter in the mail to opt out of the provision. Many users may not even be aware of the consequences, that their legal rights have been severely restricted.

“The company’s actions are unjust, but not illegal. The U.S. Supreme Court has broadly interpreted a federal law – the Federal Arbitration Act – to permit companies to force their customers into individualized, secret arbitration to resolve disputes. As a result, consumers, for the most part, cannot access the court system. According to a Supreme Court decision last year, AT&T Mobility v. Concepcion, companies may also insert class action bans with forced  arbitration clauses. This is despite the fact that some states had previously determined that class action bans are “unconscionable” and essentially let companies off the hook for wrongdoing.”