Judge Dismisses Class Action Lawsuit Against Overstock.com Due To Mandatory Binding Arbitration Clause

Did you know that every time you purchase something from Overstock.com you agree to a mandatory binding arbitration clause and have no legal recourse against the company? Even if they illegally disclose too much of your information on your receipt?

From the Madison County Record:

Shandie Deaton filed the suit Sept. 18, 2007, one month after she made a purchase on Overstock.com. She alleged her receipt violated FCRA.

The act was passed in 2003 and provides that anyone accepting credit or debit cards may not print more than the last five digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of sale or transaction.

Credit card machines put into use after Jan. 1, 2005, required immediate compliance with FCRA. Machines in use before Jan. 1, 2005, were required to be in compliance by Dec. 4, 2006.

Deaton claimed Overstock.com violated FCRA by printing the expiration date and/or printed more than the last five digits of class members’ credit card or debit card numbers on the receipts provided at the point of a sale or transaction between Overstock.com and the class members.

“Overstock.com’ violations were not the product of an accident or an isolated oversight,” the complaint stated. “Rather, Overstock.com knowingly and intentionally continued to use Devices which were not programmed to, or otherwise did not, comply…”

The lawsuit asked for monetary relief of no less than $100 and no more than $1,000 for each violation. Overstock filed a motion to dismiss, claiming that its customers agreed to mandatory binding arbitration by purchasing something from their website.

According to Overstock, customers can freely access their website, however when placing an order, they must agree to the website’s terms and conditions before they can continue.

“Any dispute relating in any way to your visit to the Site or to products you purchase through the Site shall be submitted to confidential arbitration in Salt Lake City, Utah,” a portion of Overstock’s terms and conditions reads.

“To the fullest extent permitted by applicable law, no Arbitration under this agreement shall be joined to an arbitration involving any other party subject to this Agreement, whether through class arbitration proceedings or otherwise.”

The judge ruled in favor of Overstock and dismissed the case. “Accordingly, the Court cannot conclude that arbitration of this action is prohibitively expensive,” Gilbert wrote. “Therefore, the Court will not invalidate the mandatory arbitration clause based on the theory that forcing Deaton to submit to arbitration would prevent her from vindicating her rights.”

We took a look at this arbitration clause and noticed that there’s an exception to it. If you even “threaten” to violate Overstock.com’s intellectual property rights, they reserve the right to haul you into state or federal court in the state of Utah. What a piece of work.

Arbitration, not litigation: Judge dismisses federal class action v. Overstock.com
[Madison County Record] (Thanks, Shelley!)
Overstock.com Terms & Conditions

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.