Pixel Envy

Written by Nick Heer.

Arbitration Clauses Lean on the Scales of Justice

Cabel Sasser and Zack Whittaker have each noticed that Equifax requires them to agree to TrustedID’s terms of service before confirming whether their private information was impacted by Equifax’s security breach. The catch? TrustedID’s terms include a binding arbitration clause:

By consenting to submit Your Claims to arbitration, You will be forfeiting Your right to bring or participate in any class action (whether as a named plaintiff or a class member) or to share in any class action awards, including class claims where a class has not yet been certified, even if the facts and circumstances upon which the Claims are based already occurred or existed.

Attorney Michael Fuller confirmed Sasser and Whittaker’s interpretation of this on Twitter. Similar arbitration clauses have become extremely common amongst software and technology companies especially. Jessica Silver-Greenberg and Robert Gebeloff wrote about this in 2015 for the New York Times:

By banning class actions, companies have essentially disabled consumer challenges to practices like predatory lending, wage theft and discrimination, court records show.

“This is among the most profound shifts in our legal history,” William G. Young, a federal judge in Boston who was appointed by President Ronald Reagan, said in an interview. “Ominously, business has a good chance of opting out of the legal system altogether and misbehaving without reproach.”

Equifax’s responsibility was to securely hold the private data of half the American population. One of their other jobs is to provide services that monitor for the misuse of that private data. They failed at their primary job and, to have even a hope of succeeding at their other job, people must agree not to sue TrustedID. That may not be a protection racket, but it sure sounds duplicitous and unethical.

Update: New York Attorney General Eric Schneiderman:

This language is unacceptable and unenforceable. My staff has already contacted @Equifax to demand that they remove it.

In this instance, at least, the right thing may be done. But arbitration clauses ought to be found unenforceable altogether for consumer terms of service agreements.