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« | Home | »

A sticky legal Agreement for subscribers of UFC Fight Pass

By Zach Arnold | January 3, 2014

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Last week, UFC launched their Fight Pass online subscription video streaming platform. They promised everyone two months free. By the time the UFC has their second Fight Pass card in Macau, the free trial will be over.

That is, if they haven’t already changed the fees set forth in their Terms of Use Agreement that every subscriber has to approve in order to buy the service.

The user experience for the guinea pigs who are signing up right now for UFC Fight Pass is so critical in determining what kind of first impression hardcore UFC fans will have forever about the Fight Pass site. When the Affordable Care Act in the United States was implemented by Health & Human Services, their target demographic for those signing up for health insurance was the 18-to-34 year old demographic. The Young Healthies. It was critical that the most tech savvy voting block for HHS sign up on HealthCare.Gov and get covered.

And we know what happened next. The launch of HealthCare.Gov was a total disaster. The first impression left in the minds of those who needed to be persuaded the most was a tainted impression. Bad security. Bugs in navigating the site. A lousy search engine. The people who needed to be convinced the most to buy the product were the ones turned off the fastest.

That same dynamic is in play here with UFC Fight Pass. Their core audience is the 18-to-34 year old demographic. It’s the tech savvy demographic of all demographics. It’s the Internet demographic that has tons of archived videos and streams they’ve watched over the years. Of all the demographics to alienate and piss off, this is not the one you want to frustrate when it comes to marketing an online video streaming product that is meant to obtain subscriptions.

Our colleague Tim Stark wrote two articles about UFC Fight Pass (here and here) which are absolutely worth your time to read & view. Tim is a perfect example of the type of consumer that UFC needs to attract for Fight Pass to be a success. He’s an MMA analyst who is tech savvy and willing to jump in head-first into the zero TV craze. He’s the kind of person UFC has to win over. And, so far, he’s not impressed.

So far, the reaction online amongst the online writers & fans who have tried out Fight Pass has been very mixed. More negative than positive. Rich Hansen of MMA Torch and Matt Roth soon discovered charges issued for videos they attempted to view on Fight Pass. As soon as I heard about this, I immediately recommended to Rich that he contact the Better Business Bureau or his state’s Attorney General office if he has further problems.

Then I read UFC Fight Pass’s Terms of Use Agreement. And I was taken aback by the Agreement language.

Read the fine print

99% of users who jump into zero TV platform subscriptions, in my opinion, don’t bother reading the Terms of Use Agreements that they have to sign online to watch NBA League Pass, MLB.TV, or UFC Fight Pass. And that’s to be expected because the Agreements are long, complicated, and require at least an hour of your time to read over to understand exactly what you are getting to.

After reading the problems many of my MMA writing colleagues encountered with their first experiences on Fight Pass, I started to read the Agreement. I was startled at what a horrible Agreement it is in terms of consumer protections. It is lousy.

Then I was asked by someone on Twitter if I had read similar Agreements for NBA League Pass, MLB TV, so on and so forth. So I started reading their Agreements. And they were horrific in quality, too. Enough to scare me off from ever considering subscribing to these media platforms. However, the Agreement for UFC Fight Pass is especially sticky and abhorrent. If you don’t believe me, go ahead and read the Agreement multiple times.

The hidden/changing fees

The UFC is hoping that their free two month trial will get as many people as possible to sign up. They are even throwing in a fight card from Singapore to attract sign-ups. Fight Pass is aimed for audiences in America, Canada, New Zealand, and Australia. And yet the Singapore card will air in Canada on Rogers 360.

The first thing I noticed right away with the Fight Pass Agreement is that they can change fees at any time and it’s incumbent upon you, the consumer, to regularly read the Terms of Use Agreement to see what the fee updates are. This is a standard provision that you see in the various zero TV online subscriber Agreements. It struck a chord with me, however, given that UFC is offering a two-month trial and already you have people getting charges for attempting to watch online videos.

So, what happens if Fight Pass turns you into a disgruntled customer? Well, that’s where the fun really begins.

There’s a section about refunds and an e-mail address you have to contact to try to get a response. Take note of the legalese with their repeated phrase “reasonable effort.” Which means you are at their mercy. They claim they will give pro-rated refunds as long as they don’t deem you violating their Terms of Use Agreement. So far, standard but unattractive Agreement language. But take note that their “reasonable effort” to give you a refund or credit is the “exclusive remedy.” In other words, take it or leave it. If they raise fees or start charging at any time, you gave up those rights when approving the Agreement. And if you want your money back, it’ll be on their terms.

Again, not out of the ordinary for these kinds of zero TV subscription services, but we’re not off to a hot start for giving an impression of customer friendly service.

In the Agreement, they include the standard DMCA Safe Harbor provision for copyright infringement issues.

If you find yourself in customer service hell with UFC Fight Pass over charges you want to fight and find that charging back the fees isn’t working out for you, then you might want to know what legal protections you have. The answer? When you sign the Fight Pass Agreement, they’re asking you to sign away many of your legal rights. It’s a battle of David vs. Goliath.

Venue shopping

If you attempt to challenge the UFC in court over any damages you feel they’ve imposed on you as a consumer, good luck trying to fight the Las Vegas corporate giant.

In the Terms of Use Agreement, they make it very clear where any disputes will be handled. If you have a legal problem with them, you’ll have to fight them in their own backyard on the most friendly business turf of all.

You agree that: (i) the Service shall be deemed solely based in Nevada; and (ii) These Terms of Service shall be governed by the internal substantive laws of the State of Nevada, without respect to its conflict of laws principles. Any claim or dispute between you and UFC® that arises in whole or in part from the Service shall be decided exclusively by a court of competent jurisdiction located in Clark County, Nevada. The parties all consent to the jurisdiction of such courts agree to accept service of process by mail, and hereby waive any jurisdictional or venue defenses otherwise available to it. These Terms of Service, together with the Privacy Notice at and any other legal notices published by UFC.tv on the Service, shall constitute the entire agreement between you and UFC® concerning the Service.

YOU AND UFC® AGREE THAT ANY CAUSE OF ACTION ARISING OUT OF OR RELATED TO THE SERVICES MUST COMMENCE WITHIN ONE (1) YEAR AFTER THE CAUSE OF ACTION ACCRUES. OTHERWISE, SUCH CAUSE OF ACTION IS PERMANENTLY BARRED.

Not only does the Agreement stipulate a statute of limitations for one year only, it specifies that the court venue must be in Clark County, Nevada. You have to fight in Nevada, only in Clark County, and it doesn’t specify a state or Federal court.

You are signing an online Agreement, most likely as a resident outside the state of Nevada, over the Internet with a Nevada company. Interstate commerce, right? And yet the Agreement says disputes in court have to be dealt with in their state and in their county.

Fighting Goliath on these terms makes it very difficult to mount a challenge. But how does it compare to other Agreements for online subscription services like NBA League Pass or MLB TV?

With both League Pass & MLB TV, they state jurisdiction for disputes in the state of New York. In the case of NBA League Pass’s Terms of Use Agreement, they also dictate a settlement venue. Arbitration. And they get to choose the Arbitrator.

ARBITRATION

Except as otherwise expressly set forth in this Agreement to the contrary, any and all disputes arising from or relating to this Agreement or the Service shall be solely and finally settled by arbitration. The arbitration will be governed by the Federal Arbitration Act. The arbitration will be conducted at a neutral location convenient to all parties by a single arbitrator to be selected by Us. The arbitrator’s authority shall be limited to resolving individual disputes between you and Us, and the arbitrator shall not determine, as an initial matter, whether class, mass or consolidated relief is permitted in arbitration. Notwithstanding the foregoing, without first seeking or obtaining any decision in arbitration (even if a similar or related matter has already been referred to arbitration in accordance with the terms of this paragraph), (i) We, and Our respective affiliates and licensors, may bring any claim or suit for the purpose of evidencing, enforcing, registering or defending Our or their respective intellectual property rights in any court or forum of competent jurisdiction; and (ii) We, and Our respective affiliates and licensors, shall be entitled to seek injunctive and other equitable relief in any court or forum of competent jurisdiction to enforce this Agreement.

GOVERNING LAW

This Agreement and any disputes relating to this Agreement and/or the Service will be governed by the laws of the State of New York, United States of America, without regard to its principles of conflicts of laws. Any action that you, any third party or We bring to enforce this Agreement or, in connection with, any matters related to the Service shall be brought only in either the state or Federal Courts located in a federal or state court of competent jurisdiction located within the State of New York, United States of America, and you hereby consent to the jurisdiction of such court solely for such purposes and you further waive any argument that any such court does not have jurisdiction over such dispute or that venue in any such court is not appropriate or convenient. You agree to accept service of process by reputable express carrier (e.g., UPS) and/or certified mail, return receipt requested, at the address designated by you. We will be entitled to recover costs and reasonable attorneys’ fees and expenses incurred in successfully proving any breach of this Agreement.

What’s being used here by League Pass is similar to the kind of arbitration clause you see in an insurance contract. The point of the arbitration clause is to prevent any disputes from going to court. But if you somehow manage to go to court, it has to be in New York.

With the MLB TV Terms of Use Agreement, they also use an Arbitration clause and specify New York county, New York as where all disputes will be resolved. However, take note of the clause they include if you happen to live in California:

15. NOTICE FOR CALIFORNIA CONSUMERS

Under California Civil Code Section 1789.3, California users of this Website and the other MLBAM Properties are entitled to the following specific consumer rights notice: The Complaint Assistance Unit of the Division of Consumer Services of the California Department of Consumer Affairs may be contacted in writing at 1625 North Market Blvd., Suite N 112, Sacramento CA 95834, or by telephone at (916) 445-1254 or (800) 952-5210.

Yes, the same Consumer Affairs that controls the California State Athletic Commission is the place you go to file a complaint if you have problems with your MLB TV service.

As you might notice, all of the various Terms of Use Agreement include different provisions that massage their general policy of keeping you out of the court system as much as they possibly can. All of these Agreements are unbelievably one-sided against consumer protections. You’re signing away your rights when you enter into these Agreements.

Fighting in court

If, somehow by chance of miracle, you are able to break through these contractual provisions by finding a judge or authority that can help you proceed to court, then comes another battle where if you lose you have to pay the attorney’s fees for the company you’re trying to fight with. And if you manage to get to court somehow, most likely as part of a class action lawsuit, then there are severability clauses in the agreements in which the Terms of Use Agreements can hold up as constituted if only part of the Agreement is struck down by a judge for violating the law.

Which brings us to the much larger point: if the people subscribing to UFC Fight Pass actually read the Terms of Use Agreement that they have to sign to become a subscriber, how many people would be dissuaded from signing up if they understood exactly what kind of rights they were giving up?

From my soapbox, I would strongly argue that there is a case to be made that these kinds of Term of Use Agreements are blatant Contracts of Adhesion with Unconscionable Terms.

A Contract of Adhesion basically is a deal that is so one-sided that the party trying to get out of the deal is stuck like glue because they have few rights to challenge the contract. In the case of these kinds of Agreements, they are non-negotiable — take it or leave it, and once you enter into such an Agreement, you’re stuck if you have a dispute that needs to be resolved about $ charges that you think have been unfairly billed to you. I would argue that the arbitration & court venue provisions in these Agreements are Unconscionable. Take this for example:

California courts have been at the vanguard of deeming e-commerce contract clauses unconscionable and hence unenforceable. See Comb v. PayPal, Inc., 218 F. Supp. 2d 1165 (2002), where the court found that the e-commerce agreement obligated users to arbitrate their disputes pursuant to the commercial rules of the American Arbitration Association, which is cost prohibitive in light of the average size of a PayPal transaction. Accordingly, the court denied motions by PayPal to compel users who commenced putative class action suits arising out of PayPal’s allegedly inappropriate handling of customer accounts and/or complaints to resolve their claims via arbitration.

The court noted several important factors in deciding as to why the contract clauses of Paypal were unconscionable: The court reasoned that PayPal could issue binding amendments to the User Agreement at any time without notice to users. Furthermore, the court argued that the dispute resolution program of PayPal was unconscionable because: (i) it was mandatory and required that it was resolved in Santa Clara county, California, where PayPal is located; (ii) PayPal maintained possession of customer funds until any dispute is resolved; and (iii) no class actions were allowed. The court found these provisions were an attempt by PayPal ‘to insulate itself contractually from any meaningful challenge to its alleged practices.’

If you’re Joe Schmoe and you’re trying to fight a $100 or $200 credit card charge against someone like League Pass or UFC Fight Pass and you have to to spend thousands of dollars, if not tens of thousands to fight these giants in arbitration or court, that’s completely unreasonable and unconscionable. You can see why MLB TV included the Consumer Affairs clause for California subscribers.

And what happens if a group of subscribers end up discovering their credit card information & private information (name, date of birth) hacked for the purposes of identity theft? What’s the remedy then?

Bottom line? You are taking a giant risk, in my opinion, by signing away your rights in agreeing to approve any of these zero TV Terms of Use Agreements. You are completely at the mercy of these companies in terms of customer service. If every subscriber actually read the Agreements and understood what legal protections they were giving up as consumers, they would seriously have second thoughts about subscribing to these platforms.

Lesson: read the damn fine print. And proceed with extreme caution.

Topics: MMA, Media, UFC, Zach Arnold | 13 Comments » | Permalink | Trackback |

13 Responses to “A sticky legal Agreement for subscribers of UFC Fight Pass”

  1. Brendan says:

    Just one quick note about the refunds and fighting charges and whatnot: that’s what your credit card company is for. You fight it through them, you don’t go suing the UFC.

    Other than that, tho, standard terrible user agreement for the user.

    • Zach Arnold says:

      In general, I agree with your sentiments — but there’s wording for both individual & group (class action) challenges here.

      Which is why seeing that severability clause in the agreement is one way they are protecting themselves if someone is successful in getting to court — say a class action suit against the site for bad security & people’s credit card info & DOB details getting stolen.

  2. Erik says:

    So your argument is that signing up for this service is a giant risk, because you’re completely at the mercy of the UFC in the event that they screw the subscriber over and take their money without providing what they paid for? That would make sense, if the UFC actually was likely to actually do such a thing, or otherwise intended to do so. But, since their goal is to build the service, and not rip customers off, you’re kind of attempting to take an extraordinarily unlikely event and portray it as probable. That night be the case with a con man, but that’s not how a real business works… Honestly, I’d expect this type of article to be written by someone at the Culinary Union or Deadspin, who have clear agendas when it comes to the UFC. But if you’re not officially in one of those camps, you’re clearly already in their corner, because you display enough legal knowledge to be able to talk intelligently about the topic, but also attempt to try to selectively quite from a court in CA, a state jurisdiction that’s easily the most friendly to your position, rather than the vast majority of United States courts which don’t come anywhere close to what you attempt to portray as the norm.

  3. Zach Arnold says:

    So your argument is that signing up for this service is a giant risk, because you’re completely at the mercy of the UFC in the event that they screw the subscriber over and take their money without providing what they paid for? That would make sense, if the UFC actually was likely to actually do such a thing, or otherwise intended to do so. But, since their goal is to build the service, and not rip customers off, you’re kind of attempting to take an extraordinarily unlikely event and portray it as probable. That night be the case with a con man, but that’s not how a real business works…

    I’m not telling anyone to subscribe or not subscribe. The only opinion on that front is that I personally wouldn’t subscribe to any of these zero TV platforms given how onerous their Terms of Use Agreements are.

    But what I am recommending to everyone is to actually do their due diligence and read the text of the Agreement like I did. Others may have a different interpretation of the agreement, and that’s fine with me. But all I ask is for subscribers (and those who don’t subscribe) to check it out.

    I’m not delving into psychology or motive here — I’m looking at what’s on paper and what challenges a consumer might face if they have to find a legal remedy here. I could have written this same article about League Pass, MLB TV, etc. as the primary focus and I would have said the same exact thing.

    Honestly, I’d expect this type of article to be written by someone at the Culinary Union or Deadspin, who have clear agendas when it comes to the UFC. But if you’re not officially in one of those camps, you’re clearly already in their corner, because you display enough legal knowledge to be able to talk intelligently about the topic, but also attempt to try to selectively quite from a court in CA, a state jurisdiction that’s easily the most friendly to your position, rather than the vast majority of United States courts which don’t come anywhere close to what you attempt to portray as the norm.

    The UFC Fight Pass Terms of Use Agreement claims Clark County, Nevada for jurisdiction. If someone was to try to deal with them in court, of course they would want to file an action in a friendlier venue like California. That’s kind of the whole point here. An interstate commerce agreement in which these companies argue for arbitration & venue is completely one-sided, especially if it’s a state and not Federal court.

    I’m not selectively quoting anything. I’m simply giving an opinion as to how one-sided I think the Agreement is. If people want to sign it, then go for it. But they should also understand the risks involved and that the terms of the subscription can change at any time, on a dime, with little recourse to do anything about it.

    I don’t know many people who want Fight Pass to fail. I would say the significant majority of online MMA fans have high hopes for the site and want to see it exceed their expectations. UFC’s core demographic is heavily into online video and so for the current developments so far with the site (charges for viewing matches, crashing video player, search issues, playlists) to be playing out the way they are, it’s been kind of a disappointing first impression for the fans they are targeting for subscription.

    Tim Stark wrote two articles on the site about using Fight Pass from a consumer point of view. I wrote this piece from a more legalistic point of view regarding the Agreement and how it compares to other zero TV sites. If you’re comfortable with these Agreements, then have at it. But I’d rather that everyone read the Agreement first instead of blindly skipping it and checking off that they agree when they don’t know what they are walking into.

  4. nunchucks says:

    The severability clause sounds about right. They want to avoid class action lawsuits and keep potential litigation at home base. It reminds me of the class action filed against Zappos in 2012 after thousands of people had their personal information/credit cards hacked, resulting in a mess of jurisdictional disputes for a year or so before proceeding.

    Class actions are really the only way people can realistically get injunctive relief if, say, they decide to change the billing, add service fees, charge for a particular service that was previously free, etc. You mention several have already been unknowingly charged while using Fight Pass in what they called their “free trial period.”

    Most “terms of service” will indicate the company will notify existing users if there’s been a change in those original terms. The class action against Instagram last year touched on this issue (as well as severance) – IG terms assured user notification (via e-mail) when there are “material changes” to the agreement, but as stated in the original terms, what is considered a “MATERIAL change” is solely under their discretion.

    Say you have 100K subscribers to Fight Pass. The UFC tacks on a few small fees here and there without notifying you, and they get an average of $4-5 more per user in a month. Nobody will sue over five dollars; you might complain and get a letter saying, “yeah, terms have changed; deal with it.”

    Compound this over all users for a year…the UFC collects $5-6 mil extra off Fight Pass – more than enough to tie up anyone who’s crazy enough to spend several thousand to try to get the $50-60 they were overcharged last year. It’s almost like risk analysis – what are the odds that Zuffa legal defense costs would be more than their profits from a questionable charge?

    If you have 1000 angry people pooling resources in a class action, it’d be a different story altogether. But I imagine it’d be hard to get the users, much less their collective legal reps, together on something like this (especially as they may live in different countries) and collaborate to file suit in Clark County, Nevada. And considering Zuffa’s economic ties and political (and by extension – judicial) influence here, there’s almost zero chance they’d ever have to indemnify any Fight Pass users for a few “immaterial changes” to their terms of service.

    This is just a thought. I don’t know if they’d do anything similar, but hypothetically, Zuffa could if they so chose, and ultimately, chances are, you can’t really do anything about it – after all, you already agreed to abide by the damn terms of service when you signed up for the tasty free trial.

  5. J says:

    honestly, it’s one thing to not have people sign up and miss a few cards a year that in other words they can live without. Then there is ripping off your hardcore fan base and losing die hard fans. it’s just a ridiculous stance, i’ve never bene ripped off by the ufc in any way. also, you want to complain it costs 700$ to be a fan a year. You obviously take for granted the level of talent and the fight cards being put on at these events. You started out by trying to make the ufc look bad but it just shows how bad for the sport you are.

    • The Gaijin says:

      If the spelling and horrendous grammar weren’t the first clues that you’re a total idiot, your take home-point of “You started out by trying to make the ufc look bad but it just shows how bad for the sport you are.” did a great job of confirming it.

  6. king famous says:

    Not sure if some people forgot but the name of this site is Fight Opinion. This is one of the only sites that does anything close to thinking critically about the fight game.

    I would argue most end user agreements are horrific. You need a personal lawyer these days when it comes to purchasing anything digital.

  7. truthspitter says:

    thanks for warning me buddy
    ill never purchase or sign up for another “service” (PSN, cable, internet, netflix, xbl, mortgage, etc.) in my lifetime

    i just cant trust these business people
    theyre out to get us and our money with these sticky legal agreements

  8. [...] there’s Zach Arnold over at FightOpinion, as usual delving a little deeper than most: The user experience for the guinea pigs who are [...]

  9. [...] there’s Zach Arnold over at FightOpinion, as usual delving a little deeper than most: The user experience for the guinea pigs who are [...]

  10. [...] Pass was suddenly jacked up from 10 euros to 16 euros ($22.20) for Polish subscribers. But hey, you guys were warned, right? Weigh-in results for Nogueira vs. Nelson are after the [...]

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