Google Fiber Copies Comcast, AT&T; Forces Users To Give Up Their Legal Right To Sue

Image courtesy of Discrete_Photography

Since its introduction in Kansas City, Google Fiber has presented itself as a disruptive force in the pay-TV and internet markets, offering high speeds for reasonable prices, and bringing new competition to markets generally dominated by a single provider. So it’s disappointing to learn that Fiber has decided to follow in the footsteps of AT&T, Comcast, Verizon, Time Warner Cable, and other reviled providers by quietly stripping its customers of their right to sue the company in a court of law.

Fiber updated its terms of service last week, and earlier this week it sent out emails to customers notifying them of the change.

While the email alerts users to the addition of a new section on dispute resolution, odds are that most people don’t realize exactly what is happening when they are forced to sign an agreement with a forced arbitration clause.

A March 2015 report from the Consumer Financial Protection Bureau found that, only 7% of people who were bound by one of these agreements through a financial product had any understanding of what it meant.

So What Does It Mean

Forced arbitration clauses generally do two things, and Google Fiber’s is no different. First, it dictates that any legal dispute between the company and the customer can not be brought in a court of law (though the Fiber clause does allow for small claims court filings). Instead, these complaints must be handled through the byzantine process of binding arbitration, where the damages are limited (so good luck finding a lawyer to represent you), and the arbitrator’s ruling is final (even when a glaring mistake has been made that would likely have altered the decision).

More important is the second aspect typically found in these clauses: A ban on class actions. So a company could do harm to millions of customers, but will only be held accountable to those few individuals. The CFPB found in its report that financial services companies tend to exercise their contractual right to force a case into arbitration primarily when it’s a possible class action, indicating that the entire purpose of this part of the clause is to avoid large-scale accountability for wrongdoing.

Can I Opt Out?

When reached for comment on this story, Google refused to explain its rationale behind this change to its user agreement.

However, a close look at the confusing terms of service show that users can opt out, but they must do so quickly.

According to the terms, the new agreement kicks in within 30 days of accepting the new language. Customers can, however, during that time period use this online form (you must be logged in to your Fiber account to access it) to opt out of this change and future changes to the arbitration agreement.

Given that the terms were changed on June 9 and it’s already June 16, that’s a significant chunk of time that’s already been taken away from the opt-out window, so if you want to retain your right to a jury trial if Google Fiber ever screws you over, fill that form out now.

How Is This Legal

Way back in 1925, Congress passed the Federal Arbitration Act, which was intended to streamline contractual disputes between business entities by allowing them to agree in advance that they would hammer out their squabbles outside of the courtroom.

But in the last few decades — and especially in this decade — the Supreme Court has taken an incredibly generous, anti-consumer stance on the use and enforceability of arbitration agreements and class action bans in consumer contracts, even though consumers are generally not aware of what they are signing, nor do they usually have any way of altering these agreements.

First, in 1984 SCOTUS held that the Arbitration Act applied to state law complaints, meaning companies could compel customers out of the courtroom in both federal and state legal disputes.

Then the court ruled in 2008 that arbitration rulings are binding and the court system can’t be involved, even when there is a clear legal error that should have resulted in a different result for the arbitration.

The 2011 ruling in favor of AT&T concluded that it was okay for companies to insert class action bans in lengthy user agreements that no one reads and are unalterable. That was soon followed in 2014 by another decision, declaring that class action bans were legal even in cases where the only possible way to feasibly mount a successful action would be through the combined resources of multiple plaintiffs.

Is Anything Being Done

While the Judicial branch of the federal government has taken a disappointing stance on arbitration (though that could change, depending on who ultimately replaces the late Justice Antonin Scalia), the other two prongs of the governmental trident have been poking at this issue.

The Consumer Financial Protection Bureau recently released its proposed rules for limiting the use of arbitration in financial services contracts. While that explicitly means things like bank accounts and credit cards, it could also include the telecom industry, especially if a cable/internet company provides third-party billing services for other companies.

In April, Sen. Richard Blumenthal of Connecticut introduced a piece of legislation that would directly address the Google Fiber issue. The Justice for Telecommunications Customers Act would not ban the use of arbitration, but it would bar telecom companies from forcing their customers into arbitration against their wishes.

“Lurking in the fine print of telecommunications contracts, these arbitration agreements deceptively deprive consumers of their fundamental right to sue in court,” Sen. Blumenthal said at the time. “This is simply unjust.”