This is page 2 of:

The Arbitration Clauses That Used To Protect Retailers Now Do The Opposite

September 20th, 2011

Sony’s lawyers responded in part by adding a new “Terms of Service” whereby the parties agree to arbitrate (and not litigate) any “dispute” between them. The agreement defines “dispute” as:

…any dispute, claim or controversy between you and any Sony Entity regarding any Sony Online Services or the use of any devices sold by a Sony Entity to access Sony Online Services, whether based in contract, statute, regulation, ordinance, tort (including, but not limited to, fraud, misrepresentation, fraudulent inducement or negligence), or any other legal or equitable theory, and includes the validity, enforceability or scope of this Section 15 (with the exception of the enforceability of the Class Action Waiver clause below). “Dispute” is to be given the broadest possible meaning that will be enforced.

What this means is that, if you use the PlayStation Network and someone has sold you a defective Sony Vaio (or committed fraud or misrepresentation), you can’t sue. It means if your Bravia television with integrated Internet access goes kaput, you are out of luck. If the Cyber Shot camera used to upload pictures is defective, you may not get your day in court. Remember, “dispute” is to be given the broadest possible meaning, and it applies to all Sony entities. Sony is a huge company that makes not only consumer devices but is also a full-service entertainment company.

The language above also defines a dispute as any disagreement “between you and any Sony entity,” thereby creating at least the possibility that the arbitration agreement is mutual. This could mean that Sony would be required to arbitrate any “dispute.” And that might not be a good thing for Sony.

The relationship between a consumer and a large, integrated, multinational multimedia company is a complex one. Ordinarily, we can think of dozens of things a consumer might want to sue a retailer for (defective products, rude salespeople, fraud, failure to protect data, slip and fall in a store) but few things consumers can do to raise the ire of the retailer (and the retailer’s lawyers) except failing to pay their bills.

The online environment changes this. Indeed, the Sony Terms of Service give a list of things that consumers are prohibited from doing. Consumers can’t engage in deceptive or misleading practices; harass or stalk others; upload offensive content; organize hate groups; transfer viruses, worms or malware; infringe copyrights; hack or reverse engineer code or content; or tell anyone—that’s right, not even your mother—your name or personal information through any means, among dozens of other things. You also agree not to violate the law.

So what if a consumer does any or all of these things? What if he or she pirates a Sony movie? Hacks a Sony network? Steals and sells Sony code? Uploads pirated Sony software? Assuming that the arbitration agreement is mutual, then Sony’s language may prohibit it from suing for copyright infringement, filing a complaint for hacking or pursuing any other legal remedy other than arbitration. Sony could, of course, agree by contract not to prosecute or refer for prosecution a shoplifter and instead to handle the shoplifting “dispute” through arbitration.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.