Valve Corporation, tired of paying arbitration fees, removed a mandatory arbitration clause from the Steam subscription agreement. Valve told players in yesterday's update that they should sue the company to resolve disputes.
The subscription agreement includes “changes to how disputes and claims between you and Valve are resolved,” Steam wrote in an email to users. “The updated dispute resolution provisions are found in Section 10 and require that all claims and disputes proceed in court and not in arbitration. We have also removed the class action waiver and cost and fee shifting provisions” .
Steam's agreement previously said that “you and Valve agree to resolve all disputes and claims between us in individual binding arbitration.” Now, it says any claim “shall be commenced and maintained exclusively in any state or federal court located in King County, Washington, having subject matter jurisdiction.”
Steam's email to users said the updated terms “will take effect immediately when you agree to them, including when you make most purchases, load funds to your Steam Wallet, or otherwise agree to them. Otherwise, the Agreement Updated Steam Subscriber Code will go into effect on November 1.” 2024, unless you delete or stop using your Steam account before that date.” Steam also sent a pop-up message to players asking them to accept the new terms.
A likely factor in Valve's decision to abandon arbitration is cited in a pending class-action lawsuit over game pricing that was filed last month in the U.S. District Court for the Western District of Washington. The Steam users who previously sued “mounted a sustained and ultimately successful challenge to the enforceability of Valve's arbitration provision,” their lawsuit said. “Specifically, the named plaintiffs obtained binding decisions from arbitrators that rendered Valve's arbitration provision unenforceable for both lack of notice and because it impermissibly seeks to prohibit public injunctive relief.”
Mandatory arbitration clauses are generally considered bad for consumers, who are deprived of the ability to seek compensation through individual or class actions. But many Steam users were able to easily get money from Valve through arbitration, according to the law firms that filed arbitration cases over allegedly inflated game prices.
Valve sued lawyers behind arbitration claims
Valve used to prefer arbitration because few consumers filed lawsuits and the process kept the company's legal costs down. But in October 2023, Valve sued a law firm in an attempt to stop it from filing a bunch of arbitration claims on behalf of players.
Valve's lawsuit complained that “unscrupulous attorneys” from the Zaiger, LLC law firm presented a plan to a potential funder “to recruit 75,000 customers and threaten Valve with arbitration on behalf of those customers, thereby exposing Valve to potentially millions of dollars in arbitration fees alone: 75,000 potential arbitrations multiplied by $3,000 in arbitration fees is two hundred and twenty-five million dollars“.
Valve said Zaiger's “extortionist plan” was to “offer a deal slightly less than the [arbitration] charge: $2,900 per claim approximately, attempting to induce a quick resolution.”
“Zaiger targeted Valve and Steam users for his plan precisely because the arbitration clause in the SSA [Steam Subscriber Agreement] is 'favorable' to Steam users in the sense that Valve agrees to pay the fees and costs associated with arbitration,” Valve said.
Zaiger has a “Steam Claims” website that says: “Tens of thousands of Steam users have hired Zaiger LLC to hold Steam owner Valve accountable for inflated PC game prices.” The Website said that through arbitration, “many consumers receive compensation offers without doing anything more than completing the initial form.” Another law firm called Mason LLP used a similar strategy to help gamers file arbitration claims against Steam.
There had not previously been many arbitration cases against Steam, according to Valve's lawsuit against Zaiger. “In the five years before Zaiger began threatening Valve, from 2017 to 2022, there were only two cases where Valve and a Steam user were unable to resolve that user's issue before proceeding to arbitration. Both arbitrations were ruled in Valve's favor, and Valve paid all arbitrator fees and costs to both Valve and the affected Steam user,” Valve said.
Valve's lawsuit against Zaiger was dismissed without prejudice on August 20, 2024. The ruling by the U.S. District Court for the Western District of Washington said the case was dismissed because the court lacks jurisdiction over Zaiger.