Tag: Consumer Arbitration

  • Protecting Public Rights

    Posted by

    Amy Schmitz

    Contracts professors, policymakers, consumer groups and others have become particularly interested in another post-AT&T Mobility LLC v. Concepcion case.
     The United States Court of Appeals for the Ninth Circuit recently agreed to an en banc rehearing
    of Kilgore v. Keybank, 673 F.3d 947 (9th Cir. 2012).  The issue in this case is whether Concepcion precludes courts from preserving judicial access for public injunctions under state consumer protection statutes by invoking the public policy exemption from the Federal Arbitration Act's ("FAA") mandate that courts enforce arbitration agreements according to their terms.  The en banc hearing is set for some time in December of this year.

    The case is important on many levels.  It raises fundamental questions about the reach of FAA preemption in the wake of Concepcion, in which the United States Supreme Court held that the FAA preempted courts from using California unconscionability law to strike a class relief waiver and order class arbitration.  Moreover, the case implicates states' power to protect individuals' access to meaningful injunctive relief in order to enforce and protect public rights under state statutes, such as consumer protection statutes.  

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  • Needle in a Haystack?

    Posted by

    Amy Schmitz

    Following my post regarding PayPal's new opt-out arbitration provision, I talked to many individuals who could not find the directions for how they can opt out (hence "needle in a haystack").  Here they are:

    "Opt-Out Procedure.

    You can choose to reject this Agreement to Arbitrate ("opt out") by mailing us a written opt-out notice ("Opt-Out Notice"). For new PayPal users, the Opt-Out Notice must be postmarked no later than 30 Days after the date you accept the User Agreement for the first time. If you are already a current PayPal user and previously accepted the User Agreement prior to the introduction of this Agreement to Arbitrate, the Opt-Out Notice must be postmarked no later than December 1, 2012. You must mail the Opt-Out Notice to PayPal, Inc., Attn: Litigation Department, 2211 North First Street, San Jose, CA 95131.

    The Opt-Out Notice must state that you do not agree to this Agreement to Arbitrate and must include your name, address, phone number, and the email address(es) used to log in to the PayPal account(s) to which the opt-out applies. You must sign the Opt-Out Notice for it to be effective. This procedure is the only way you can opt out of the Agreement to Arbitrate."

    It seems PayPal is banking on our inertia.  How likely are we to send a letter in the mail to opt-out when PayPal is used for e-contracts?  Why not simply have an online opt-out procedure, as companies do for unsubscribing to online newsletters?  

    That said, PayPal's arbitration procedure is arguably reasonable on its face.  

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  • PayPal Joined the Party

    Posted by

    Amy Schmitz

    Adam Levitin commented on the eBay's opt-out arbitration program on CreditSlips.org a few weeks ago, and there have been campaigns calling for consumers to opt out of eBay's program.  Public Citizen has provided instructions on its website for consumers "to protect their constitutional rights by opting out of a forced arbitration clause and ban on consumers joining together in class actions."  eBay is not alone in using this sort of opt-out arbitration program.  Many tech companies have joined, or plan to join, the "party" in requiring consumers to opt out or be subject to binding arbitration.

    Opt-out programs also may be layered now that PayPal is joining the party.  It recently sent notices to its users of policy updates, effective November 1, 2012, stating:

    "You will, with limited exception, be required to
    submit claims you have against PayPal to binding and final arbitration, unless
    you opt out of the Agreement to Arbitrate (Section 14.3) by December 1, 2012. Unless
    you opt out: (1) you will only be permitted to pursue claims against PayPal on
    an individual basis, not as a plaintiff or class member in any class or
    representative action or proceeding and (2) you will only be permitted to seek
    relief (including monetary, injunctive, and declaratory relief) on an
    individual basis."

    Query whether campiagns will begin for consumers to opt out of this program?  It also will be interesting to see how these opt-outs work in tandem due to PayPal's prominence as the purchasing mechanism for sites like eBay?