Xbox Live terms of use rule out lawsuits

Microsoft updates user agreement to require binding arbitration, limit its liability to no more than the cost of one month of service, about $5.

The new Xbox Live dashboard isn't the only change to the service Microsoft is rolling out this month. The company has also updated its Xbox Live terms of use to prevent customers from suing the company for any reason and to severely limit its liability in any dispute.

XBLA now stands for "Xbox Loves Arbitrating."

Among the most notable changes is a binding arbitration clause. In the case of any dispute where informal negotiations have failed, the Xbox Live terms of use now require customers to submit to binding arbitration. As such, Xbox Live users must give up their right to take Microsoft to court or be part of a class action (although small claims court is still an acceptable recourse). Microsoft also included a separate clause specifically forbidding class action suits and a severability provision such that if a court finds any part of the agreement illegal or unenforceable, all remaining clauses will remain in effect.

Finally, Xbox Live users must also agree to limit Microsoft's liability in any dispute to about $5 for Xbox Live Gold members or absolutely nothing for Xbox Live Silver users.

According to the agreement, "You can recover from us for all successful claims only direct damages up to a total amount equal to your Service fee for one month. You cannot recover any other damages, including consequential, special, indirect, incidental, or punitive damages and lost profits."

If purchased as an annual subscription, the Xbox Live Gold service fee for one month would be $5. Xbox Live Silver is a free service and has no fee. While the agreement specifically states that liability limit applies to the service, loss of data, viruses, breach of contract, misrepresentation, omission, and negligence, it later states that, "Nothing in these terms will exclude or restrict liability for death or personal injury arising from our negligence, fraud, gross negligence, or willful intent."

While the wording is different, the new Xbox Live terms of use are similar to changes Sony made to the PlayStation Network terms of service in September. Those revisions were made to prevent class-action suits, a number of which were filed against the company following the massive PSN data breach, in which hackers gained access to personal information of an estimated 77 million Sony customers.

[UPDATE]: Microsoft responded to GameSpot's request for comment as follows:

"We can confirm that the Xbox Live Terms of Use have been updated with a clause stipulating that in the event of a dispute, US customers and Microsoft agree to informal negotiation and then to binding arbitration if the issue cannot be resolved informally.

Changes to the Terms of Use are designed to ensure that our customers have an easy way to file a dispute without requiring formal legal action. They may now bring a dispute to our attention by filling out a simple Notice of Dispute form found at www.xbox.com/notice and mailing in documentation in support of their claim. We will then work to resolve the dispute to their satisfaction within 60 days. Any customer unsatisfied with the outcome of this informal process may easily initiate arbitration with the American Arbitration Association.

Customers may also choose to bring their claims in their local small claims court if they meet the normal jurisdictional requirements.

For detailed information, please visit: http://www.xbox.com/en-US/Legal/LiveTOU.

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Discussion

229 comments
gabrielperry
gabrielperry

Definitely a sticky issue. I certainly don't approve of anything that curtails my rights, and this definitely sets a bad precedent for abuse of EULAs. I can certainly understand a company's desire to limit their liability, though, because people sue over the most trivial issues. It's a shame that we've become so eager to sue that they feel this is necessary. Offhand, I can't really imagine a reason why I would want to sue Microsoft over an issue related to my use of Xbox Live. What could they possibly do that would cause so much damage to me that I need to sue them? Sure, it's conceivable that they, like Sony, could be hacked, and thereby inadvertently allow my credit card info to be compromised. In that case, though, I'd simply notify my credit card company of any fraudulent charges, and move on with my life. If a such a compromise occurs on a large enough scale, and the credit card company wants to take it out of Microsoft's hide, so be it, that's not really my concern. Let's also remember that this agreement pertains to your use of the Xbox Live service - not the hardware. One final thought: Class action lawsuits most often mean a law firm lines their pockets, while the people actually wronged get a pittance. They have their uses, such as discouraging companies from large-scale negligence (one reason why I'm hesitant to allow their restriction), but they are rarely about seeing "justice" done.

Atheosis
Atheosis

@GoingPostal13 If you think a situation like that is actually going to be negated by a flimsy clause in a user agreement, you don't know much about the law. The user agreement covers services provided by the company, not gross negligence resulting in death.

GoingPostal13
GoingPostal13

@Atheosis Console manufacturer Sicrosendo releases a new games console, knowing that there's a minute but possible chance of a fire risk should the machine be left plugged into the mains on stand-by. You buy one, but one night yours catches fire and the electrical problems short the smoke detectors in your house. You awake to find toxic fumes have performed a kill-shot on your wife and children. You manage to escape, just, but the fumes have rendered your ability to work impossible. You reasonably think this merits compensation. Unfortunately you accepted Sicrosendo's T&Cs with abandon, rendering your legal rights forfeit. Now you live in a cardboard shelter, feeding off discarded chip wrappers and the charity of strangers, who more often than not ignore or spit on you. You sit there sobbing, the bitter tears staining your memories. If only you'd cared about your legal rights, you wouldn't be here now.

StryfeBringer
StryfeBringer

Nice that even if you already have Gold, you need to update and agree to the new EULA in order to get full use of your pre-existing Gold membership. Existing members should be grandfathered in without having the change in EULA apply to them since this was not the "contract" that was agreed upon when purchasing the Gold membership.

supertom221
supertom221

@Rocker6 LOL, indeed. I'd say, rules were meant to be broken anyway. And hey, if you love a game, you buy it. If not, why even bother? Maybe the game is too short? Maybe I won't like it? Maybe i'll deeply regret it. It got me quite sad however, when I found out Witcher's pirating rates were 4x higher than actual sales, because it was a quality game made by a studio that actually cares. Now not only were they getting screwed by players, they are getting screwed by greedy publishers as well. Where is the justice here, I ask you? I'd DL a copy of TESV, FIFA or COD any day and not give a damn, but ruining a studio with such great botential.. FEELS BAD, MAN.

supertom221
supertom221

@Randal__Graves No one, that's the trick and why ToU's and EULA's are borderline scams at best.

Rocker6
Rocker6

@supertom221 Well,if the police started enforcing anything,they would have to thin their ranks a lot very quickly.Need a Windows copy,cop is the best person to ask,nuff said...

Randal__Graves
Randal__Graves

Let's be honest here, Who the hell reads the terms of service anyways?

supertom221
supertom221

@Rocker6 Precisely. If anybody were to enforce it here... Naahhh that will never happen. Just the other day a Cop I know asked me to download a game for his son. NO ONE CARES. And actually i think Gamespot is UK/AUS, which is 10 times as worse.

Rocker6
Rocker6

@supertom221 Indeed,thats how it goes in my country,gaming and any kind of copyright laws are fully ignored due too much bigger problems to worry about(fortuntaley,war or any sort of conflict isn't one of them),also since most consumers are pirates,enforcing anti-piracy laws would throw half of our country in jails,including many law enforcers too.I howewer know my duty to support the gaming industry and PC gaming,but I don't look kindly at any form of DRM... Also,I don't think freedom of speech is the problem here,its only how Gamespot is US based site,and US pays a lot of attention to copyright laws,so they apply to Gamespot...

supertom221
supertom221

@Rocker6 HAH, I also got a point loss for that one!... and many others... Dammit, I should be level 40 by now. SO much for freedom of speech, ey? @rgrambo I know you responded to Rocker6, but ijust had to say, no one enforces that crap. Maybe U.S. and certain other American-influenced countries. Throughout the Middle East, Asia, and certain parts of Europe, you'll find out no one cares for game cracking and pirating, simply because we have better things to worry about... Y'know, things like war, the economy collapsing, grand protests, treaties being proken, that sorta stuff... Gaming ain't that big a factor now, is it?

parrot_of_adun
parrot_of_adun

That's a bit worse than ruling out just class-action suits. I'd say MS crossed a line here...

X-RS
X-RS

I dunno what's stupider, that THAT can be done or that Microsoft JUST did it.

Kendojin
Kendojin

So basically this is to cover Microsofts ass from it's customer (myself and others) if they ever have a leak Sony did? The thing is Xbox Live has always been the most secure, against hackers modders and so on. Hell they put out updates that shut down modded Xboxes (depending on said mod), I guess since they have the most subscribers they don't wanna be the most sued, maybe...?

zakaweb
zakaweb

I think if I ignore this my life wont be any different.

Atheosis
Atheosis

Can't think of any reason I would sue the manufacturer of my game console, so I really don't care... Our litigous society is kind of nuts to be honest.

Justforfun44
Justforfun44

@Decessus - The situations you menu do not warrant lawsuits. It would cost you more in attorney fees than you would gain from suing the company. You might think you going to accomplish something, but like I said you are only going to pay large attorney fees so have at it.

Rocker6
Rocker6

@rgrambo Yeah,perhaps I better delete my message,it may give me another moderation by Gamespot,but where Im from,copyright laws are very vague...

Richardthe3rd
Richardthe3rd

@nevryn Great post, that's comforting to know that forced arbitration can be thrown out. Sounds like most of these ToS contracts will still come down to the judge ruling on the case, at least in relevant scenarios.

Unfallen_Satan
Unfallen_Satan

@Richardthe3rd Great comment on the class action issue! I think collectively, consumers will feel the burn of the class action waiver more than the binding arbitration for the reasons you said. Here is to the hope of a better future! @nevryn Thanks for the info on the DoD Appropriations Act! I had no idea. I don't know how well that limitation will translate to policy regarding non-government contractors and non-employment contracts, but it's very interesting. I wonder how much business MS does with the DoD.

NoHotAshes
NoHotAshes

what a shame... my live subscription expires xmas day and i was debating on whether to renew it or not, i decided not to so seems like i made a good choice. Not that i support all of those moronic lawsuits, i just dont like being limited.

dhsk8sb
dhsk8sb

So now I'm your female dog Microsoft?! I have spend a pretty penny on your business and know your not liable if I'm robbed? This is getting out of hand.

nevryn
nevryn

@Decessus The problem is the vagueness of the clause. The Department of Defense Appropriations Act prohibits forced arbitrations in most egregious cases. In other words, they can't blanket force arbitration for all aspects of use. For example, say MS decides to open up a website to sell your social security numbers. MS could still be sued for this, a forced arbitration clause isn't going to save them.

Rocker6
Rocker6

@supertom221 Yep,we did have this talk,only about Ubisoft always on-line DRM few months ago.I even have a Point Loss moderation to show from it :P

Haasdude
Haasdude

@Richardthe3rd - You know what's also an effective deterrent for corporate misconduct? Not buying their product. If I ever feel that Microsoft wrongs me in a serious way I'll simply stop giving them money.

Richardthe3rd
Richardthe3rd

@Haasdude Doesn't change the fact that it can be an effective deterrent for corporate misconduct, and a way consumers can use the law to attempt to correct or at least make certain behavior unfavorable.

Spacerac
Spacerac

For both Sony and Microsoft to include these clauses, as Bernie Mac would say; "This is some bull."

Haasdude
Haasdude

Class Action Lawsuits - the people each get 50 cents while the lawyer gets thousands of dollars. Yup, sure going to miss that.

Richardthe3rd
Richardthe3rd

@Unfallen_Satan "If left unchecked, this kind of policy will permeate all facets of the digital domain as almost every digital service has a TOU." Yes EXACTLY. There's been a lot of effort to shape the digital landscape. Now that we're getting some rulings to that effect the wild-wild west workings of the past seem like the good old days. I think the scariest part is that it seems like courts might let them do this, at least for now. And the removal of class-action lawsuits definitely scales damages down to whatever an individual could incur rather than what is collectively inflicted. Since a lot of it won't satisfy base damages thresholds, this potentially removes a very large amount of liability for these guys. Really, class action suits would be the only viable way for anyone to legally act against widespread abuses/ negligence. I just really think Supreme Court screwed the consumer (well, lawyers at least) on this one.

supertom221
supertom221

@Rocker6 I never implied PC to be 100% free, but I think we both can agree this is as close as it gets. Cracking is especially right when you are hounded by Draconian DRM's like Origin and Ubisoft's infamous DRM Launcher. Also, didn't I talk to you before? Small forum, this is :P

Rocker6
Rocker6

[This message was deleted at the request of the original poster]

supertom221
supertom221

@Rocker6 @Richardthe3rd @BuiltForSin @JohnF111 I do understand your points, but all of you guys do realize everything you said is only in relation to game marketing services like Origin and Steam, right? No one forces you to use either. You can play a game without using any online service, Just like SONY or Microsoft don't force you to use PSN or XBLA. It's only if you want to play online, which perfect sense to bind it to such a service. If you don't want your SP experience to be tied to a service like Origin or Steam, your solution is simple-- Crack it. Not illegal, as long as you own the game, and binds you to none other than yourself. Perfectly fine. The PC gaming rig you own is YOURS, and that's what matters. so long as you own a PS3 or XBOX360, you will always be at SONY/MS's reach.

yman173
yman173

Geez, nothing like signing your rights away! Way to go Microsoft...you've found a way to roll-back the US Constitution and take our rights to what they were in 1650. God Save King Gates!!

Damnation_6
Damnation_6

Well I do partly get it because in the USA people sue over the silliest things.

Aggie1295
Aggie1295

Most of these new clauses would be tossed out by a court in about five minutes.

Daemoroth
Daemoroth

@peanut1229, you obviously didn't read your PS3's latest TOS... Sony started this little snowball when they included a clause that prohibits you from joining a class-action lawsuit against them. EA followed and now Microsoft. You enjoying your PS3 as much now?

aahov
aahov

@nurnberg this is a contract that you have to agree to.. government cant change that fact. for the average user this wont really affect you. its simply enforced to protect the company. soo maybe theyll rule the world soon enough

aahov
aahov

[This message was deleted at the request of the original poster]

liam82517
liam82517

@crazimax I have a xbox360 and a ps3 and I prefer my xbox because the controller feels better in my hands. That being said I agree with absolutely everything you just said. Good job bud.

IceJester45
IceJester45

I suppose this is the standard now. Sucks.

Oldboy08
Oldboy08

You americans gotta stop suing people/companies for the most asanine reasons.

Tandem_Toad
Tandem_Toad

This is actually legal and preferred in many disputes, like employment and insurance claims. It's becoming more wide spread. The only way to appeal this process to a court is to show evidence that the arbitration was corrupted somehow. Otherwise, courts will uphold the decision of the arbitrator.

steelmouth
steelmouth

so MS does learn from Sony's mistake,hw about learning from Sony's better traits ie have a lil more exclusive

nurnberg
nurnberg

This means nothing. Companies like Microsoft don't rule the world and they don't make the laws. Governments and lawmakers can easily intervene.

imprezawrx500
imprezawrx500

Americans just need to stop suing for the most stupid little things then this would never happen.

crazimax
crazimax

what the hell is wrong with fanboys?..i own 360 and ps3, but i prefer my ps3 tho cause most of my friends own ps3..anyways..you fanboys are pathetic..dont go into comment sections to bash on other consoles just so you can feel less insecure about your choices of console..and don't think for a second that your idiotic comments will change a 360 fanboy into a ps3 fanboy..damn stupid kids..and if you fanboys are grown men or women..you're acting like little kids, hence the term fanBOYS..you fanboys are truley pathetic..who do you think you are?..wait let me guess, psychologically, do you feel that a certain brand like SONY or MICROSOFT is an extension of yourself?..so is that why you feel the need to defend certain brand?..SONY and MICROSOFT is laughing at you idiots because you're working for them for free by wasting your time going into forums and try to change other pp's opinions on a certain brand

TardisPilot14
TardisPilot14

@RaddaRaddaRadda, @mtouchprod and others: I know this forced arbitration clause sounds crappy, and it is, but the fact is it probably would be upheld in court, on its face. The Federal Arbitration Act from the early 1900s was the first clear signal that the government highly favors arbitration to costly trials, and in accord with that, mandatory arbitration clauses have been upheld consistently in the courts. See Graham v. Scissor-Tail. As a matter of law, you clicking "I Agree" creates a binding contract, whether you know what's in it or not, so long as you don't rescind your agreement within 30 days. It's an adhesion contract, and as much as it may suck, it's still enforceable. The part of this particular EULA that would be overturned is the class action ban. Scott v. Cingular Wireless in 2007 showed the beginning of a trend to stop enforcement of those types of clauses. So, in short, this EULA would probably be upheld in part and overturned in part.

voldo25
voldo25

Gee I wonder why people hack and jail break your consoles.