Update: Dropbox changes its terms of service to stop class-action lawsuits

The cloud storage firm gives customers 30 days to 'opt out' of the new terms

Dropbox is notifying customers that it is changing its terms of service for dealing with legal claims brought against its cloud storage and file-sharing service.

The new terms appear designed to prevent users from filing class-action lawsuits and instead require binding arbitration through the American Arbitration Association (AAA).

Under a section of its service terms entitled "Resolving Disputes," the cloud service states: "We Both Agree To Arbitrate. You and Dropbox agree to resolve any claims relating to these Terms or the Services through final and binding arbitration, except as set forth under Exceptions to Agreement to Arbitrate below."

The clause further states: "No Class Actions. You may only resolve disputes with us on an individual basis, and may not bring a claim as a plaintiff or a class member in a class, consolidated, or representative action. Class arbitrations, class actions, private attorney general actions, and consolidation with other arbitrations aren't allowed."

The new terms also state that in a case where an agreement to arbitrate is determined not to apply to an individual claim, both the plaintiff and Dropbox will bring the dispute before a federal or state court of San Francisco County.

Dropbox is offering customers the ability to opt out of the arbitration clause through a form that must be submitted within 30 days of first accepting the new terms.

In a blog about the new terms of service, Dropbox said arbitration is "a faster and more efficient way" to resolve legal disputes and maintained that it is looking to simplify much of the language so its terms of service are "readable" and "avoid unnecessary legalese."

For example, Dropbox explained in its blog, in order to provide customers with document previews, it's automated system needs permission to access and scan user content first. "So we explain this in the new Terms," Dropbox wrote.

"Our commitment to keeping your stuff safe and secure hasn't changed. We don't sell your personal information to third parties. We don't serve ads based on the stuff you store in our services. And, as always, your stuff is yours," the blog states.

A Dropbox spokesperson responding to a Computerworld request for comment said in an email that arbitration is a faster and more efficient way to resolve legal disputes.

She added that Dropbox will pay all arbitration fees for claims less than $75,000.

"Well also pay an additional $1,000 on top of any arbitration award thats more favorable than an offer Dropbox makes to resolve a claim. Users and Dropbox will still be able to resolve eligible disputes in small claims court. After the Terms of Service become effective, the opt-out will continue to be available for new users for 30 days within their sign-up to the services. Finally, opting out of arbitration does not terminate or result in changes to the services," she said.

Lucas Mearian covers consumer data storage, consumerization of IT, mobile device management, renewable energy, telematics/car tech and entertainment tech for Computerworld. Follow Lucas on Twitter at  @lucasmearian or subscribe to Lucas's RSS feed . His e-mail address is lmearian@computerworld.com.

See more by Lucas Mearian on Computerworld.com.

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