EBay gives buyers, sellers ultimatum on arbitration


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.

I would have gotten an answer to this question from EBay’s Ramirez if she’d favored me with a phone call. But EBay, like most other Silicon Valley companies, doesn’t seem to think actual conversations are worth its time.

So I asked Ramirez by email. She didn’t reply.

Then there’s the new provision on the rights of EBay and its cronies to contact users. It says:

“You authorize EBay, its affiliates, agents and independent contractors to contact you at ... any telephone number at which we reasonably believe we can reach you, using any means of communication, including, but not limited to, calls or text messages using an automatic telephone dialing system and/or prerecorded messages, even if you incur charges for receiving such communications.”

Alfred Esser, 72, of Solana Beach, has been an EBay user for about 15 years, typically buying or selling something about once a month. He saw that reach-out-and-touch-someone provision and got worried.


“Affiliates? Agents? Independent contractors?” he asked. “Who are these people? Why do they have such a right to contact me? What about my privacy?”

Good question.

“This is pretty outrageous,” said Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse in San Diego. “You could be bombarded with text messages on a cellphone number you never even gave them, and you’d have no right to stop them.”

He added: “I can’t imagine why they’re attaching such great importance to being able to reach the consumer.”

I asked EBay’s Ramirez what was up with this in-your-face contract language.

She said only that “EBay does not share or market its users’ phone numbers with parties outside of EBay for marketing purposes without the user’s explicit consent,” which didn’t really answer the question at all.

All I know is that unless you send in that letter, don’t even think of filing a lawsuit over this.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send tips or feedback to