New Xbox 360 TOU prevents people from suing Microsoft

The new Xbox 360 Dashboard update has now been released for owners of Microsoft's Xbox 360 console. The update also comes with a new Terms of Use statement that users of the console must agree to in order to continue to use the Xbox 360. The TOU statement, which can also be viewed at the Xbox.com web site, includes some new legal language that technically will prevent people from filing any kind of lawsuit against Microsoft if they have a dispute concerning the Xbox 360.

In Section 18 of the TOU: Microsoft states:

18.1.4. BINDING ARBITRATION. IF YOU LIVE IN THE UNITED STATES, YOU AND MICROSOFT AGREE THAT IF YOU AND MICROSOFT DO NOT RESOLVE ANY DISPUTE BY INFORMAL NEGOTIATION UNDER SECTION 18.1.2 ABOVE, ANY EFFORT TO RESOLVE THE DISPUTE WILL BE CONDUCTED EXCLUSIVELY BY BINDING ARBITRATION IN ACCORDANCE WITH THE ARBITRATION PROCEDURES IN SECTION 18.1.7 BELOW. YOU UNDERSTAND AND ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION, 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. INSTEAD, YOU UNDERSTAND AND AGREE THAT ALL DISPUTES WILL BE RESOLVED BEFORE A NEUTRAL ARBITRATOR, WHOSE AWARD (DECISION) WILL BE BINDING AND FINAL, EXCEPT FOR A LIMITED RIGHT OF APPEAL UNDER THE FEDERAL ARBITRATION ACT. ANY COURT WITH JURISDICTION OVER THE PARTIES MAY ENFORCE THE ARBITRATOR'S AWARD.

There is an exception to this rule. Under the new TOU, you can take Microsoft to small claims court for any Xbox 360 related dispute.

In another part of Section 18, the TOU states:

18.1.6. CLASS ACTION WAIVER. YOU AND MICROSOFT AGREE THAT ANY PROCEEDINGS TO RESOLVE OR LITIGATE ANY DISPUTE, WHETHER IN ARBITRATION, IN COURT, OR OTHERWISE, WILL BE CONDUCTED SOLELY ON AN INDIVIDUAL BASIS, AND THAT NEITHER YOU NOR MICROSOFT WILL SEEK TO HAVE ANY DISPUTE HEARD AS A CLASS ACTION, A REPRESENTATIVE ACTION, A COLLECTIVE ACTION, A PRIVATE ATTORNEY-GENERAL ACTION, OR IN ANY PROCEEDING IN WHICH YOU OR MICROSOFT ACTS OR PROPOSES TO ACT IN A REPRESENTATIVE CAPACITY. YOU AND MICROSOFT FURTHER AGREE THAT NO ARBITRATION OR PROCEEDING WILL BE JOINED, CONSOLIDATED, OR COMBINED WITH ANOTHER ARBITRATION OR PROCEEDING WITHOUT THE PRIOR WRITTEN CONSENT OF YOU, MICROSOFT, AND ALL PARTIES TO ANY SUCH ARBITRATION OR PROCEEDING.

In essence, by agreeing to the new Xbox 360 Terms of Use, you are forfeiting the right to file any lawsuit, whether personal or via a class action suit, against Microsoft if something should happen such as, for example, a massive and lengthy shut down of Xbox Live.

As Kotaku points out, Microsoft only admitted to hardware issues with the first batch of Xbox 360 consoles (The Red Ring of Death) after many lawsuits against the company were filed. This new TOU would make it much harder for the company to admit such an issue if something similar were to happen today.

The good news? There is a clause at the very beginning of the new Xbox 360 TOU that gives users a way out:

Your continued use of the Service is your acceptance of the changed contract, except that Section 18.1.11 permits you to reject changes to Section 18.1 (arbitration agreement) within 30 days of the change.

You can mail that request to Microsoft at Microsoft Corporation, ATTN: LCA ARBITRATION, One Microsoft Way, Redmond, WA 98052-6399. We suggest doing that ASAP.

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44 Comments

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Dusco25 said,
If you are providing a service to a mass public how can you in turn say that the public you serve can not sue.

Because the service is optional, and they created/own it. If you choose to participate in this optional service, you are bound by whatever legally acceptable terms the proprietors feel like applying. It's not like health care or food services, it's an online gaming network.

I need a terms of usage for my car and my house that says if you use my stuff and you hurt yourself you cant sue me..... oh wait if I did that I'd get laughed at my the judge.... first telcos doing this arbitration stuff now everyone else is doing it, maybe if judges would throw out frivilous cases we wouldnt need this

Doesnt say anything about bringing actions to court over your own negligence, just any actions it seems.

I get there trying to cover there own ass aswell but its a bit of step to far imho.

Tho im biased after having to wait ridiculous amounts of time just to get a simple refund after I was a victim of the Fifa hack/scam. Tho as Ive stated elsewhere I dont see how as I use a unique password for the account associated only with it and full of characters, numbers and symbols

This is great news. This will save on costs. Are you really going to sue Microsoft over a game console? People sue like they are playing the lottery. Give it up people.

GeoNode said,
This is great news. This will save on costs. Are you really going to sue Microsoft over a game console? People sue like they are playing the lottery. Give it up people.

If it were the source of a fire I would. Actually, I wouldn't have to because my insurance company would.

I would love to see how far this can't get class action status because users agreed not to clause will go in court.

Most of the time class action status goes when there is some wide-spread physical problem and could lead to fires. For instance the Apple MacBook T-MagSafe adapter class action law suit over wire freying and potentially arcing/sparking. If MS has a similar problem on the 360 they would make asses of themselves in court with their "contract" here.

When Sony did that, ppl said "I'll sell my PS3 and buy a 360" and stuff like that. Now MS did just the same as Sony... Where to run now? Will everybody buy a Wii?

Gaara sama said,
Hahaha nice try M$ if i buy it and something happen but ms can't not fix it i suing them , with No question ask

And they are not taking that away, the unenforceablility of the contract aside, they still give you arbitration rights, you could still take them to court

And that is only if you are in the US, as it seems to be the only region affected by this change

License is not a contract. For example, you can own a xbox360 and a small cousin (or a third person) can accept this license, hence the real owner is not accepting it.

In fact, even a cat can accept a license.

Magallanes said,
License is not a contract. For example, you can own a xbox360 and a small cousin (or a third person) can accept this license, hence the real owner is not accepting it.

In fact, even a cat can accept a license.

I first thought you meant you could own both a 360 and a small cousin!

Azies said,
Isn't surprising that it's US only, since the US isn't a democracy anymore.

The US isn't a democracy anyway. It's a republic.

Azies said,
Isn't surprising that it's US only, since the US isn't a democracy anymore.

It was never intended to be. The forefathers were very specific in that it was a Republic as Democracies they felt were unsustainable. Of course now we've gone way past "Democracy"...

Azies said,
Isn't surprising that it's US only, since the US isn't a democracy anymore.
Considering it never was a Democracy to begin with...

The reason its only enforceable in the US is because that is where Microsoft's "problem" is. As someone said above, the billion dollar lawsuit someone brought because their Live service auto-renewed...this is to save them millions in lawyer fees and court costs.

Utter garbage. Company license agreement cannot supersede the first amendment. If this ever went to court, a judge would throw it out.

mattking said,
Utter garbage. Company license agreement cannot supersede the first amendment. If this ever went to court, a judge would throw it out.

I think a judge would throw this out, but not because of the First Amendment. The First Amendment protects US citizens' free speech and limits GOVERNMENTAL limitations of said speech

License agreements can't supersede laws, so either this would fall apart if a lawsuit WAS filed, or the US seriously needs to fix their broken law system.

Kushan said,
License agreements can't supersede laws, so either this would fall apart if a lawsuit WAS filed, or the US seriously needs to fix their broken law system.

Exactly. For example, many landlords put a clause in their leases that say, "Landlord can come into the apartment at any time for any reason." However many states (including Minnesota) consider that an unenforceable clause -- and a tenant can sue a landlord $50 each time the landlord comes into your apartment without prior notice. Just because it's in a legal document, doesn't make it legal.

Fezmid said,

Exactly. For example, many landlords put a clause in their leases that say, "Landlord can come into the apartment at any time for any reason." However many states (including Minnesota) consider that an unenforceable clause -- and a tenant can sue a landlord $50 each time the landlord comes into your apartment without prior notice. Just because it's in a legal document, doesn't make it legal.

Wow, $ 50... That's worth sueing over...

It is absolutely true, though that they can put whatever they want in these contracts and it just is not valid if a law supercedes it. In the US though, I believe that would be a state by state thing. I'm not aware of a Federal law that states they cannot do this...

M_Lyons10 said,

Wow, $ 50... That's worth sueing over...

It is absolutely true, though that they can put whatever they want in these contracts and it just is not valid if a law supercedes it. In the US though, I believe that would be a state by state thing. I'm not aware of a Federal law that states they cannot do this...

Unless there is a Federal law that protects your right to sue for redresss in case of injury. Being a Canucklehead, I'm not positive of what the U.S. law would be, but I'd imagine that the right to sue for redress is in fact protected.

In my opinion this is a good thing for Microsoft and I would have to agree with their reasoning to have their TOU amended to add this. Just recently a man filed a multi-billion dollar lawsuit against Microsoft because he was charged for an Xbox LIVE subscription that he did not cancel on his own.

This prevents people from suing Xbox (Microsoft) because of their own ignorance of the TOU. I think that allowing claims in only small claims court is the best. Why? Well why would you need to sue Microsoft for millions of dollars because your Xbox got a red ring or that you forgot to remove the cards on your account? It's just stupid. Small claims can handle basically everything that you might need to deal with if there is in fact a case to be presented in court.

It's not like that since your Xbox got a red ring you lost some huge financial deal that did cost you millions. People are just to greedy for their own good and now Microsoft is protecting themselves against the ignorance of their users and their greed.

Did you really expect Microsoft to sit there and keep taking lawsuit after lawsuit?

itylernallen said,
multi-billion dollar lawsuit against Microsoft because he was charged for an Xbox LIVE subscription that he did not cancel on his own.

And the guy was perfectly right. Cancelling an xbox live account back then was a pain in the ass and was so much complicated you could almost assume MS did it on purpose so people could not cancel it.

LaP said,

And the guy was perfectly right. Cancelling an xbox live account back then was a pain in the ass and was so much complicated you could almost assume MS did it on purpose so people could not cancel it.

I was able to remove my credit card information with no problem at all. If someone is unable to remove a simple card or is too lazy to simply call in then they should not have the right to sue someone for their own ignorance and laziness. Ignorance is not an excuse for anything.

Cancelling an account should be as easy as creating one. If not then it's a problem imo.

If you can create an account from your the 360 dashboard then you should be able to cancel it from the 360 dashboard as well.

Asking people to call, wait for a line, try to understand a guy who barely speak french, ask him to speak english cause his french is so poor you can't even understand one word, then having difficulties understanding him cause you are bad in english, then answer his question as to why you want to cancel this anwesome service that is xbox live (i sold my xbox 360), then answer his question as to why you sold this awesome console that is the 360, then after 15 minutes finally your account is cancelled.

This is stupid and i perfectly understand the guy.

These types of clauses are superseded by local or national consumer protection laws, like in the UK and Canada.

Nice try, Microsoft!!

EDIT: Just checked the TOU for Canada and this clause is not there.

~Johnny said,
It explicitly states only for the US.

That's true. But just because it isn't illegal to put that wording in their ToS, doesn't mean that a judge is going to deny class action status because of this clause.

HyBry said,
Wouldn't this be against 'Unfair Terms in Consumer Contracts Regulations' in UK?

Seems to be for US only, since it starts off with:

IF YOU LIVE IN THE UNITED STATES,

Bioran said,

Seems to be for US only, since it starts off with:

I would expect US to have a similar regulations or laws.
Mentioned UK more as an example because I knew the exact regulation.

Stuff like that really should be made illegal...
And while we're at it, any user agreement should not be allowed to be any longer than a standard A4, that way they'd have to be written in a normal way without all the legalese terms only lawyers get anyway and normal people could actually be expected to read what the accept...

Leonick said,
Stuff like that really should be made illegal...
And while we're at it, any user agreement should not be allowed to be any longer than a standard A4, that way they'd have to be written in a normal way without all the legalese terms only lawyers get anyway and normal people could actually be expected to read what the accept...

Unfortunately, to cover themselves, they probably need all the legalese... lol

And honestly, as far as this is concerned, I'm a bit cross. On one hand, I don't think companies should really be able to do this, but on the other, they are offering arbitration, just not class action status. And at the end of a class action suite, the claimants end up with very little anyway. The lawyers walk away with all of the money... So, why would you even do a class action suite?

M_Lyons10 said,

And at the end of a class action suite, the claimants end up with very little anyway. The lawyers walk away with all of the money... So, why would you even do a class action suite?

It's true. But a class action suite cost a lot more for the company. And this is probably the fear of such suite that made MS add 3 years of warranty for the RRoD problem. MS did not add it because they liked the eyes of 360 owners. They probably did it to prevent the incoming class action suit which could have cost more than the extended warranty did.

But

M_Lyons10 said,

On one hand, I don't think companies should really be able to do this, but on the other, they are offering arbitration, just not class action status.

They ask for arbitration but they have no rights to deny class action status. Not their call. Even with this ToS a class action law suit could still happen. ToS is more for "if you break our rules, we will end your service"..... they are stretching its usefulness here and that hasn't been tried in court yet.