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 will have to sue the company to resolve disputes.
The Subscriber Agreement includes “changes in the way disputes and claims are resolved between you and Valve,” Steam wrote in an email to users. “The updated dispute resolution provisions are in Section 10 and require that all claims and disputes be resolved in court and not through arbitration. We have also removed the class action waiver and cost and fee shifting provisions.”
The Steam agreement previously stated that “you and Valve agree to resolve all disputes and claims between us in individual binding arbitration.” Now it says any claims “shall be brought and enforced exclusively in any state or federal court located in King County, Washington, having jurisdiction over the subject matter.”
Steam's email to users states that the updated terms “will take effect immediately upon your acceptance, including when you make most purchases, fund your Steam Wallet, or otherwise accept them. Otherwise, the updated Steam Subscriber Agreement effective November 1, 2024, unless you delete or terminate your Steam account before then.” Steam has also sent a pop-up message to gamers asking them to agree to the new terms.
A likely factor in Valve's decision to stop arbitration is cited in a pending class action lawsuit over game pricing filed last month in the US District Court for the Western District of Washington. The Steam users who previously filed the lawsuit “have persistently and ultimately successfully challenged the enforceability of Valve's arbitration provision,” according to their lawsuit. “Specifically, the named plaintiffs have won binding awards from arbitrators rendering Valve's arbitration provision unenforceable both for lack of notice and because it impermissibly seeks to block public injunctive relief.”
Mandatory arbitration clauses are generally seen as bad for consumers, who are denied the opportunity to seek compensation through individual or class action lawsuits. But many Steam users could easily get money from Valve through arbitration, according to law firms that filed the arbitration cases over allegedly inflated game prices.
Valve has sued lawyers over arbitration claims
Valve used to prefer arbitration because few consumers filed 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 filing a host of arbitration claims on behalf of gamers.
Valve's lawsuit complained that “unscrupulous attorneys” at law firm Zaiger, LLC presented a plan to a potential financier “to recruit 75,000 clients and threaten Valve with arbitration on behalf of those clients, potentially costing Valve millions of dollars in arbitration fees alone.” would be exposed: 75,000 potential arbitrations times $3,000 in fees per arbitration is two hundred and twenty-five million dollars.”
Valve said Zaiger's “extortion scheme” was to “offer a settlement slightly lower than the settlement [arbitration] costs – $2,900 per claim or so – in an attempt to achieve a quick resolution.”
“Zaiger specifically targeted Valve and Steam users because of the arbitration clause in the SSA [Steam Subscriber Agreement] is 'beneficial' to Steam users because Valve agrees to pay the fees and costs associated with arbitration,” Valve said.
Zaiger has a “Steam Claims” website that states: “Tens of thousands of Steam users have turned to Zaiger LLC to hold Steam's owner, Valve, responsible for the high prices of PC games.” The website said that through arbitration, “many consumers receive a compensation offer without doing anything other than completing the original form.” Another law firm called Mason LLP used a similar strategy to help gamers file arbitration claims against Steam.
There hadn't been many arbitration cases against Steam before, according to Valve's lawsuit against Zaiger. “In the five years before Zaiger started threatening Valve, from 2017 to 2022, there were only two cases in which Valve and a Steam user were unable to resolve that user's issue before going to arbitration. Both arbitrations were ruled in favor of Valve resolved and Valve paid all arbitrator fees and costs for both Valve and the affected Steam user,” Valve said.
Valve's lawsuit against Zaiger was dismissed without prejudice on August 20, 2024. According to the ruling by the U.S. District Court for the Western District of Washington, the case was dismissed because the court does not have jurisdiction over Zaiger.
