EBay gives buyers, sellers ultimatum on arbitration

Auction website EBay tells users that they must send a letter to opt out of arbitration or forgo joining class-action lawsuits.

If you're an EBay user, heads up: The big dog of online auctions says it will take away your right to join class-action lawsuits unless you send in a letter challenging the move.

EBay also is serving notice that the company and its affiliates reserve the right to track you down any way they please, "even if you incur charges for receiving such communications."

Taken together, the latest changes to EBay's user agreement suggest the company is taking a harder line with its more than 100 million buyers and sellers.

Users of the site have until Nov. 9 to opt out from the arbitration provision of the new contract. If you don't, the company says, "you will only be permitted to pursue claims against EBay on an individual basis, not as part of any class or representative action or proceeding."

In other words, you'll only be able to arbitrate disputes. Businesses say arbitration is fairer and more efficient than lawsuits. Consumer advocates say the process almost always favors companies, not customers.

EBay is the latest high-profile company to declare war on class-action lawsuits after the U.S. Supreme Court ruled last year that businesses can require arbitration in their service contracts. Microsoft announced recently that it was barring class actions for disputes involving most of its products.

Companies generally prefer arbitration because settlements are limited and because professional arbitrators, whose fees are typically paid by the company, tend not to bite the hand that feeds.

It's unusual, though, for a company to give customers the chance to opt out from an arbitration clause. In most cases, such provisions are presented on a take-it-or-leave-it basis.

Banks and telecom companies, for example, routinely tell customers that they have to abandon their right to file lawsuits or they'll have to cancel their credit card or cellphone contract.

EBay says you can maintain your right to sue as long as you're willing to send a signed snail-mail letter to National Registered Agents, 2778 W. Shady Bend Lane, Lehi, UT 84043. There's no way to opt out online or by email.

But if you do opt out, you'll still be able to buy and sell on the site, right? EBay isn't clear on this point.

The agreement says that all other provisions will continue to apply even if you reject the arbitration clause, suggesting that life goes on.

But an email sent to users alerting them to the contract changes includes a link to a "help" page "if you choose not to accept the new terms." Clicking that link takes you to an EBay page outlining how to shut down your account.

So which is it?

Kari Ramirez, an EBay spokeswoman, said by email that people's accounts will remain active if they opt out of the arbitration provision.

She said the opportunity to say "no thanks" to arbitration was offered if users "do not feel it is right for them."

"The arbitration provision encourages swift and reasonable resolution, as opposed to litigation that can be protracted, expensive and often dissatisfying to customers," Ramirez said. "We believe this approach will benefit both EBay and our customers."

OK, so points to EBay for actually giving people a choice. I can't think of another major company that's done this.

But a demerit for making the opt-out process unnecessarily complicated. Requiring people to send in a letter, rather than allowing them to opt out online or by email, will deter many from making the effort. It's thus not a fair choice.

By the same token, if EBay is so convinced that arbitration is the way to go, why not give people the choice of opting in to such a provision? All those who don't would retain the right to sue by default.