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Verizon says Yahoo users must waive class-action rights—or stop using Yahoo

Yahoo, facing data breach lawsuits, starts enforcing mandatory arbitration.

Verizon is forcing users of Yahoo services to waive their class-action rights and agree to resolve disputes through arbitration. Yahoo users who don't agree to the new terms will be cut off from the services, though Verizon hasn't said exactly when the cutoff date is.

The change happens as Verizon fights lawsuits related to a 2013 data breach that affected all three billion Yahoo accounts. The company could try to use the new class-action waiver to fight such lawsuits after any future incidents.

 

Verizon completed its $4.48 billion acquisition of Yahoo's operating business in June 2017, and the company formed a new subsidiary called "Oath" that combines Yahoo and the Verizon-owned AOL.

The new Oath terms of service "contain a binding arbitration agreement and class action and jury trial waiver clauses..., which are applicable to all US users," the terms say.

Congress has considered legislation to ban many mandatory arbitration clauses, but it hasn't followed through yet and the practice remains legal.

 

The AOL terms already contained a binding arbitration clause and class-action waiver before Verizon bought that company. But the Yahoo terms didn't previously contain such clauses.

"Please note that although our services will continue to be available under the existing terms for now, you will eventually need to agree to the new Terms of Service and Privacy Policy in order to continue to use our services," said an email that Oath sent to Yahoo Mail users last week.

Class action suit and settlement

Yahoo must still face a previously filed lawsuit over the data breach, a federal judge ruled last month. The suit is a putative class action on behalf of Yahoo users.

Separately, Yahoo agreed to an $80 million settlement of a class action filed by Yahoo investors, who alleged that Yahoo violated securities laws by making "false and misleading" statements about Yahoo security and the data breach.

No class actions, even in arbitration

Oath's new binding arbitration agreement contains the following language:

You understand that by agreeing to these terms, arbitration or a small claims action will be the sole and exclusive means of resolving any dispute between us. You also understand that by agreeing to these terms, you and Oath are giving up the right to bring a claim in court or in front of a jury (except for matters that may be brought in small claims court), and that you and Oath are giving up the right to proceed with any class action or other representative action.

Oath arbitration will be administered by the American Arbitration Association. Collective arbitrations will not be allowed.

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