Valve Corporation, tired of paying arbitration fees, has removed a mandatory arbitration clause from Steam’s subscriber agreement. Valve told gamers in yesterday’s update that they must sue the company in order to resolve disputes.
The subscriber 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 in Section 10 and require all claims and disputes to proceed in court and not in arbitration. We’ve also removed the class action waiver and cost and fee-shifting provisions.”
The Steam agreement previously said that “you and Valve agree to resolve all disputes and claims between us in individual binding arbitration.” Now, it says that any claims “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 become effective immediately when you agree to it, including when you make most purchases, fund your Steam wallet, or otherwise accept it. Otherwise, the updated Steam Subscriber Agreement will become effective on November 1, 2024, unless you delete or discontinue use of your Steam account before then.” Steam also pushed a popup message to gamers asking them to agree to the new terms.
One likely factor in Valve’s decision to abandon arbitration is mentioned in a pending class-action lawsuit over game prices that was filed last month in US District Court for the Western District of Washington. The Steam users who filed the suit previously “mounted a sustained and ultimately successful challenge to the enforceability of Valve’s arbitration provision,” their lawsuit said. “Specifically, the named Plaintiffs won binding decisions from arbitrators rendering Valve’s arbitration provision unenforceable for both lack of notice and because it impermissibly seeks to bar public injunctive relief.”
Mandatory arbitration clauses are generally seen as bad for consumers, who are deprived of the ability to seek compensation through individual or class-action lawsuits. But many Steam users were able to easily get money from Valve through arbitration, according to law firms that filed the arbitration cases over allegedly inflated game prices.
Valve sued lawyers behind arbitration claims
Valve used to prefer arbitration because few consumers brought claims and the process kept the company’s legal costs low. But in October 2023, Valve sued a law firm in an attempt to stop it from submitting loads of arbitration claims on behalf of gamers.
Valve’s suit complained that “unscrupulous lawyers” at law firm Zaiger, LLC presented a plan to a potential funder “to recruit 75,000 clients and threaten Valve with arbitration on behalf of those clients, thus exposing Valve to potentially millions of dollars of arbitration fees alone: 75,000 potential arbitrations times $3,000 in fees per arbitration is two hundred and twenty-five million dollars.”
Valve said that Zaiger’s “extortive plan” was to “offer a settlement slightly less than the [arbitration] charge—$2,900 per claim or so—attempting to induce a quick resolution.”
“Zaiger targeted Valve and Steam users for its scheme precisely because the arbitration clause in the SSA [Steam Subscriber Agreement] is ‘favorable’ to Steam users in 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 engaged Zaiger LLC to hold Steam’s owner, Valve, accountable for inflated prices of PC games.” The website said that through arbitration, “many consumers get compensation offers without doing anything beyond completing the initial form.” Another law firm called Mason LLP used a similar strategy to help gamers bring arbitration claims against Steam.
There hadn’t previously been many arbitration cases against Steam, Valve’s lawsuit against Zaiger said. “In the five years before Zaiger began threatening Valve, 2017 to 2022, there were only two instances where Valve and a Steam user could not resolve that user’s issue before proceeding to arbitration. Both of those arbitrations were resolved in Valve’s favor, and Valve paid all of the arbitrator fees and costs for both Valve and the impacted Steam user,” Valve said.
Valve’s lawsuit against Zaiger was dismissed without prejudice on August 20, 2024. The ruling in US District Court for the Western District of Washington said the case was dismissed because the court lacks jurisdiction over Zaiger.
