Most mobile app users do not take the time to read the terms of service that typically accompany opening and using the app for the first time. Doubtless, most of the 7.5-plus million people who have downloaded the Pokemon Go! smartphone app are typical in this sense. Getting into the fine print, however, reveals a problem for users who agree to the terms: a forced arbitration clause which (1) eliminates the user’s ability to sue the game’s developer publicly in court, instead requiring private arbitration of any dispute; and (2) eliminates the user’s ability to participate in any class action. This is of concern for any consumer product, but particularly in the case of an app which presents potential privacy and data security risks. In short, frequently the only efficient way to hold a corporation accountable for breaches of privacy or data security is through a class action lawsuit. This is because: (1) the investigative costs involved in this type of litigation are immense; (2) the harm to each individual affected user may be very small; and (3) the overall harm to all affected users may be many millions of dollars.
Forced arbitration has been a growing phenomenon in large corporations’ terms of service for decades. From the consumer advocate’s perspective, these clauses and procedures are pernicious. The Consumer Financial Protection Bureau agrees, and after finding that such clauses in bank and financial institution contracts are unfair and unconscionable as a whole, has proposed a regulation outlawing forced arbitration clauses in consumer financial services contracts. Of course, this regulation would not affect Niantic, the developer of Pokemon Go!, since its business is computer software and not financial services.
The silver lining is that the Pokemon Go! terms of service allows users to opt out of the forced arbitration clause, as long as they do so within 30 days of first agreeing to the terms of service. All the user needs to do is email Niantic at firstname.lastname@example.org and clearly state that the user is opting out of the arbitration clause in the terms of service. Our recommendation is that all Pokemon Go! users preserve their legal rights in this way.