Netflix Is Now Banning Class-Action Suits Too

NEW YORK (MainStreet) – Unhappy with your Netflix service? While you’re welcome to cancel your service, you won’t have the option of suing the company anymore.

In an update to its terms of service made earlier this month but only recently noticed by a user on tech news site Slashdot, Netflix states in no uncertain terms that users who have disputes with the company must submit to binding arbitration, and will not have the option to join a class-action suit.

“You and Netflix agree that any dispute, claim or controversy arising out of or relating in any way to the Netflix service, including our website, user interfaces, these Terms of Use and this Arbitration Agreement, shall be determined by binding arbitration instead of in courts of general jurisdiction… YOU AND NETFLIX AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING,” reads the new terms.

Netflix is hardly the first company to prohibit its users from banding together in a lawsuit. Last year Microsoft changed the terms of service on Xbox Live to insert a binding arbitration clause, following the lead of competitor Sony, which did the same for its PlayStation Network service. As we reported at the time, the arbitration process is generally regarded as less consumer-friendly than the court system.

And unfortunately for consumers, all three companies are well within their legal rights to do this: The Supreme Court ruled in 2010 that state laws prohibiting forced arbitration clauses are in fact unconstitutional.

Companies are therefore free to keep inserting these clauses into their user agreements, and we doubt Netflix will be the last to do it.

Matt Brownell is a staff reporter for MainStreet. You can reach him by email at matthew.brownell@thestreet.com, or follow him on Twitter @Brownellorama.