New PlayStation Network ToS Include a No Suing Sony Clause
kotaku.comIANAL but wouldn't these Terms of Service be unenforceable? It doesn't seem like Sony is offering anything extra in consideration, rather just limiting your rights. If they change their ToS to limit your rights, wouldn't they have to offer some consideration for this type of contract to be enforceable?
IANAL, but arbitration clauses are standard in contracts[1] at least in the United States. Arbitration is generally seen as preferred because suing people is actually very expensive.
In Sony's favor, Sony excluded small claims. So for pretty much everyone this arbitration clause is meaningless. The limit for small claims is in the thousands of dollars (depending on state) [2]. The circumstances where Sony would be liable for more than a few thousand to a single consumer would have to be pretty extraordinary.
Also in Sony's favor, Sony did not choose to use the arbitration clause to set an onerous jurisdiction. Sony could have said all arbitration needed to take place in a specific city in the middle of nowhere. Sony didn't even pick the location of its headquarters; you can pick any jurisdiction. Most arbitration clauses I've seen set a jurisdiction that favors the contract writer, so I'd say this puts Sony in a decent light for not doing the same.
If you really wanted to find fault with Sony's particular arbitration clause, it would be that it is binding. Neither side can appeal the decision of the arbitration panel to a higher court. But keep in mind this cuts both ways, and it really isn't unusual. It is even endorsed in the United States.
I should also note that arbitration clauses can be voided if the panel can be proven to be biased. So this isn't necessarily a license for Sony to circumvent the law, at least against a well funded opponent. And anyone with the balls to sue Sony for any serious amount of money would be a well funded opponent.
[1] http://en.wikipedia.org/wiki/Arbitration_clause
[2] http://www.nolo.com/legal-encyclopedia/small-claims-suits-ho...
Are damages of more than a few thousand that uncommon as a consequence of identity theft? I suspect not, and if any damages result from a security breach of their service, I believe identity theft is the most likely cause.
According to this article from 2006[1] the average out of pocket loss (to the consumer) from identity theft was around $400 and is often nothing.
While the fraud committed from identity theft is generally in the several thousands of dollars, this is almost entirely absorbed by businesses. In the United States the consumer liability for credit card theft is federally capped at $50 [2]. Most credit card companies just go ahead and make it $0 to sound good in advertisements. As a side note, it is criminally foolish to ever use a debit card in place of a credit card because the liability limits are higher and more strict to enforce [3].
So yes, even for most victims of identity theft, small claims would more than cover their potential damages. Not to mention the legal fees to prepare the case would dwarf all but the most disastrous losses. Most people would be far better to take Sony to small claims court for the $150 filing fee and get the maximum $4000 or whatever and be done with it.
[1] http://www.bbbonline.org/idtheft/safetyquiz.asp
[2] http://en.wikipedia.org/wiki/Credit_card_fraud#Cardholder_li...
[3] http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre04.shtm
Out of pocket loss does not equate to total damages. Time lost and effort spent trying to clean it all up is significant.
In light of this, I have to think that the real handicap here is against class actions.