Consumer Confidential: Microsoft to prohibit class-action suits
Published: Friday, June 8, 2012
Updated: Friday, June 8, 2012 06:06
Microsoft's Windows operating system accounts for about 84 percent of the personal computer market. That's hundreds of millions of people worldwide using the company's core product.
At least 40 million video gamers challenge one another from 35 countries via Microsoft's Xbox consoles, according to company stats. More than 200 million people use Microsoft's Skype video-chat service monthly. Microsoft's Bing is the second-most-popular search engine after Google.
The software giant remains one of the most dominant players in the tech world, empowering a wide range of activities and interactions. But if you have a problem with the company, don't even think about joining a class-action lawsuit.
As far as Microsoft is concerned, that's the one thing you can't do.
The company has announced it's changing many of its customer contracts to prohibit consumers from banding together in addressing grievances that might not be large enough to merit an independent lawsuit.
"When a customer in the United States has a dispute about a Microsoft product or service, many of our new user agreements will require that, if we can't informally resolve the dispute, the customer bring the claim in small claims court or arbitration, but not as part of a class-action lawsuit," Microsoft's assistant general counsel, Tim Fielden, said in a blog post.
Fielden argued that the policy switch "gives Microsoft powerful incentives to resolve any dispute to the customer's satisfaction before it gets to arbitration," and that it means "customer complaints will be resolved promptly."
A Microsoft spokeswoman declined to elaborate on Fielden's blog post.
But despite the company's assertions of increased customer satisfaction, the reality is that Microsoft is telling people they can stuff it if they want to join together in exercising their constitutional right to a jury trial.
And the company has the full backing of the U.S. Supreme Court in staking out this arrogant, deeply consumer-unfriendly position.
"It's disappointing that Microsoft would do this, but it's not surprising," said Christine Hines, consumer and civil justice counsel for the advocacy group Public Citizen. "This is the trend among companies, and it's been getting worse and worse."
That trend kicked into high gear after the high court ruled in a 5-4 decision last year that businesses can require arbitration and prohibit class-action lawsuits in their service contracts. The decision specifically involved AT&T but applies to all companies in all industries.
Businesses generally prefer arbitration because settlements are limited and because professional arbitrators, whose fees are typically paid by the company in a dispute, tend not to bite the hand that feeds.
A 2007 report by Public Citizen found that, over a four-year period, arbitrators sided with credit card companies 94 percent of the time in disputes with California consumers.
Class-action lawsuits are often abused by settlement-seeking attorneys. But the fact remains that such lawsuits are the most effective way of holding businesses accountable for misdeeds involving relatively small amounts of money.
If a Microsoft glitch resulted in Xbox users, say, losing only a few bucks each, it's hard to imagine anyone seeking a legal remedy. But a class action would potentially result in a multimillion-dollar payout by Microsoft, thus making clear to the company that its actions have consequences.
"Ending class-action lawsuits allows a company to evade accountability for wrongdoing," said Hines. "You're denying consumers their legal rights."
And that, of course, is the whole point: tipping the balance of power in favor of corporations.
Factor in the Citizens United ruling, in which businesses were given a green light to spend as much as they want on political campaigns, and it's clear the Supreme Court is happy to defer to the interests of those with the deepest pockets.
The Consumer Financial Protection Bureau is considering a rule that would prevent banks, credit card issuers and other financial services firms from forbidding class-action lawsuits. The Dodd-Frank Act signed into law by President Barack Obama in 2010 gives the agency such authority.
But that wouldn't prevent a non-financial company like Microsoft from doing as it pleases, just as most phone and cable companies similarly would continue getting away with arbitration-only provisions. That's where the Arbitration Fairness Act comes in.
The bill was introduced last year by Sens. Al Franken, D-Minn., and Richard Blumenthal, D-Conn., and by Rep. Hank Johnson, D-Ga., in the House. It would amend the Federal Arbitration Act to invalidate all arbitration clauses in consumer and employment contracts.
In other words, it would block companies all companies from blocking class-action lawsuits.
The bill has faced fierce opposition from the U.S. Chamber of Commerce and other business lobbyists, and, according to Public Citizen's Hines, "is not going anywhere at the moment."
So Microsoft's barring of class actions will only serve to encourage other tech heavyweights to follow suit. As it stands, people can file a class-action lawsuit against Google. They can file a class action against Apple, and Facebook, and Twitter.
Anyone want to bet how long that'll last?