Don't forget to check the terms of service, kid.

In the future, if you have a problem with a Microsoft consumer product and want to take the company to court, you could be prevented from banding together with your fellow users in a class-action lawsuit.

That’s the effect of updated user agreements being rolled out by Microsoft. The new terms require users to give up their rights to participate in class-action suits against the company. Instead, they’ll need to go to arbitration or small-claims court.

The move takes advantage of a 5-to-4 U.S. Supreme Court decision last year that lets companies insert these kinds of clauses in user agreements and other standard-form contracts.

So you’re thinking you can just avoid the updated agreement, right? Not necessarily. For example, Microsoft last winter updated its Xbox Live user agreement with this type of clause, and users who didn’t consent to it and install the update weren’t able to continue using the Xbox Live service.

[Note: This reference has been corrected since the original post. Microsoft says Xbox users are still able to use their consoles — to play a game from a disc, for example — if they don’t agree to the new terms of use. However, they can’t use the Xbox Live service unless they consent to the change.]

The company will “implement similar changes in user agreements for other products and services in the coming months as we roll out major licensing, hardware or software releases and updates,” said Tim Fielden, a Microsoft assistant general counsel, in a blog post announcing the changes on Friday, right before the long U.S. holiday weekend.

Here’s how Fielden explains the change …

“We think this is the right approach for both Microsoft and our U.S. customers. Our policy gives Microsoft powerful incentives to resolve any dispute to the customer’s satisfaction before it gets to arbitration, and our arbitration provisions will be among the most generous in the country. For instance, we permit arbitration wherever the customer lives, promptly reimburse filing fees, and, if we offer less to resolve a dispute informally than an arbitrator ultimately awards, we will pay the greater of the award or $1,000 for most products and services—plus double the customer’s reasonable attorney’s fees. Most important, this approach means customer complaints will be resolved promptly, and in those cases where the arbitrator agrees with the customer’s position, the customer will receive generous compensation, and receive it quickly.

“It’s also worth noting that we have a 45-day refund policy for certain Microsoft software or hardware purchased from a retailer which provides for a full refund and reimbursement of shipping costs of up to $7.”

Other companies that have adopted the practice include the four biggest U.S. wireless carriers. I wasn’t able to find similar clauses in the terms of service for Apple or Google, but if anyone sees something I’m missing, please let me know.

I’ve asked a Microsoft representative for a list of the major products that will come with this clause, and I’ll update this post depending on the company’s response.

Update, Tuesday morning: Microsoft declined to provide the list of products affected by the change.

Sony is also among the companies that have implemented similar policies, rolling it out with a mandatory PlayStation 3 update last year.

Comments

  • Guest

    Can’t blame them, but not exactly a great PR story. Guess that explains the – cough – convenient timing of the MS blog entry.

  • Curse

    So would MS have fixed all those red-ringing Xbox 360’s if this clause were present?

  • Eric_Jaffa

    Congress should make it illegal to take away consumers’ rights this way.

    • Sportsterpac

      yup we need more regulations on bullying companies like MS

      • zhirow

         Yes because consumers having rights is bullying…

        • foulkeyu

          “Reading” isn’t really your thing, is it?

  • Pawsagogodave

    Well if the agreement can’t override local state or federal law then what good is it. If it keeps the person that sues just to make millons off of the ideas of others good for them. There are too many lazy people wanting to get rich off of others these days.

  • zhirow

    Seriously? Can someone tell me the last time someone got rich off of a class action suit??

    • Tango

      Sadly, the lawyers do every day.  Class action lawsuits are rarely about the individual and almost always a business model for law firms seeking to make money in settlments.

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