by Brian Wolfman
Earlier this year, we told you (here, here, and here) about eBay's terrible new arbitration clause that bars its customers, both sellers and buyers, from participating in class actions against the company. The new clause came with a cynical twist: eBay allowed its customers to opt out of the clause within a tight deadline if they sent a snail-mail letter to the company containing a bunch of specific information. The right to opt out was all corporate double-speak from eBay. If eBay really wanted to give its customers a choice, it would have let them choose an arbitral or judicial forum when their disputes with eBay arose. At the least, eBay could have allowed its customers to opt out via an email reply to the company's email announcing the new policy, rather than by snail mail. But eBay just wanted to give its arbitration clause the aura of consent when, in fact, it was driving the clause down its customers' throats.
Now, as The Consumerist explains here, the photo-sharing company Instagram is following in eBay's footsteps -- with a pre-dispute binding arbitration clause and a class-action ban, along with a largely illusory opt-out provision. (The Consumerist is trying to organize an opt-out campaign against eBay, just as Public Citizen did against eBay.)
But the Instagram aribtration clause is even worse than eBay's. As The Consumerist notes, Instagram's clause bans its customers' participation in an Attorney General's (or other public official's) representative action, such as an action brought under the California Business and Professions Code. After banning class actions, the Instagram provision goes on to say:
You also agree not to participate in claims brought in a private attorney general or representative capacity, or consolidated claims involving another person’s account, if Instagram is a party to the proceeding. [emphasis added]
Many state high courts, I believe, would think of this ban on participation in all representative actions (and the way it is being extracted from consumers) as unconscionable and, thus, unenforceable. Instagram's ban strikes me as a serious affront to state consumer enforcement policies around the country. Would the U.S. Supreme Court require the ban's enforcement under the Federal Arbitration Act even if a state supreme court found it unconscionable? Perhaps we'll find out.