Sony to Users: Game Over for Class Action Lawsuits

Sony is drawing the ire and scorn of consumer rights advocates by requiring gamers to relinquish their legal rights in order to keep playing their PlayStation 3s (PS3s).

To download the PS3’s latest software update, gamers must agree to new terms and conditions that expressly prohibit class action litigation against the company. Gamers who object to the waiver and refuse to download the update will find their consoles reduced to not much more than very expensive hunks of designer plastic — they won’t be able to access the PlayStation Network without the update, rendering many PS3 games unusable.

Users can maintain their right to class action lawsuits, but only if they have the foresight to read the fine print and carefully follow its instructions. The terms of service allow them to opt-out of the restriction by sending a snail-mail letter to Sony Legal within 30 days of downloading the update.

Considering that most gamers do their best to speed through the pages of legalese that stand between them and their dragon-slaying, it’s unlikely that Sony will get many responses.

In place of the class action lawsuits — or any lawsuit, for that matter, since the terms and conditions also took away the right to sue the company for any reason — Sony will require all disputes to be resolved through binding arbitration.

Although arbitration agreements are relatively common, class action restrictions are not. Experts are divided on whether the limitation will be enforceable in court.

Restriction Comes After Massive Data Breach

The restriction comes in the wake of last spring’s month-long PlayStation Network outage. Sony was forced to take the network offline after a massive data breach caused by a hacker attack. More than 100 million PlayStation Network accounts were compromised in the attack in which hackers stole personal information, including birth dates, email addresses, and credit and debit card numbers.

At least one class action lawsuit has already been filed as a result of the breach. The suit alleges that Sony was aware of vulnerabilities in the PlayStation Network but did not take appropriate action to prevent against an attack. Further, it claims that the company failed to warn consumers of a potential breach, both before the attack and after it happened. Although the network was compromised on April 19, 2011, Sony did not inform users of the breach until several days later.

Sony isn’t revealing much, so it’s likely that the public won’t get a full picture of the breach’s damage until the lawsuit moves forward. They’d do well to pay attention this time around — if Sony gets its way, they won’t have another chance.