From the associated Ars Technica article:
IF YOU DO NOT WISH TO BE BOUND BY THE BINDING ARBITRATION AND CLASS ACTION WAIVER IN THIS SECTION 15, YOU MUST NOTIFY SNEI IN WRITING WITHIN 30 DAYS OF THE DATE THAT YOU ACCEPT THIS AGREEMENT. YOUR WRITTEN NOTIFICATION MUST BE MAILED TO 6080 CENTER DRIVE, 10TH FLOOR, LOS ANGELES, CA 90045, ATTN: LEGAL DEPARTMENT/ARBITRATION AND MUST INCLUDE: (1) YOUR NAME, (2) YOUR ADDRESS, (3) YOUR PSN ACCOUNT NUMBER, IF YOU HAVE ONE, AND (4) A CLEAR STATEMENT THAT YOU DO NOT WISH TO RESOLVE DISPUTES WITH ANY SONY ENTITY THROUGH ARBITRATION.
You are contractually obligated to both Apple and AT&T, so even if you use this loophole to get out of your contract with Apple when they change the contract, your obligation to AT&T continues. IANAL, but my assumption would be that a change in the Apple contract in no way legally changes your AT&T contract, so you are still liable to either honour your obligation to AT&T or pay their (typically exorbitant) cancellation fee.
And note, I don't mean to pick on Apple. I just chose them as a concrete example. It could easily be the other way around or two different companies.
Your spin isn't helping anyone and detracting from the actual issue at hand, which is whether SONY has a right to take your right to sue over security for a free online service.
Downvoter: Please explain why you disagree? Or have I mis-stated something as fact?
Other games require you to be online to simply install.
Some newer Blu-Ray discs require updates to the PS3's firmware. You cannot update the firmware without accepting the EULA.
You lose enormous functionality by not accepting the EULA.
With every one of these insane EULA updates, I'm thinking more and more about using one of the custom firmwares.
One thing is for certain - their anti-consumer stance ensures I won't ever buy another Sony product!
No that is not true. I downloaded little big planet and for a month I didn't have internet and was able to play without having updated it. If the game requires an update it's not mandatory. It only makes you update if you go online but you don't have to do that.
Problem is lots of people who don't have a PS3 and don't know the facts keep propogating anti-sony spin simply because they don't like certain practices of Sony the conglomerate. But it does no one a favor to keep up ad-hominem attacks on Sony.
Therefore, to those who wonder why Sony doesn't quit all this nonsense with rootkits and DRM and privacy violations, etc., etc., the answer is, because it doesn't hurt them. People still do business with them anyway.
(Kinda makes you wonder about all the "you must treat your customers well" articles you see on here.)
And more than once, I have physically put a product back on the shelf when I realized it was made by Sony, so it is costing them business, at least from me. I estimate that my decision has cost them at least $2,000 so far, most of that being when I went for non-Sony TVs.
It's not necessarily even a contradiction, if your primary business is selling to consumers it's entirely reasonable that a company would want to keep a positive image going.
For a company that makes earth-moving equipment primarily purchased by strip mining operations, no one would question the business sense of them not donating a percentage of their profits to environmental protest organizations.
For a company that sells to some gamer demographic, perhaps it would be the better part of wisdom to, say, decline to antagonize the likes of Geohot and the noncommercial hackers, modders, and Linux users of their platform. (Never mind the legally questionable tactic of retroactively disabling previously advertised and purchased functionality).
Since it probably is; I think these days most people are probably buying a PS3 for PSN so if users can no longer access it they should bring the device back and demand their money bag. If Sony gets away with this expect more companies to follow suit.
My question is, how do you know the end-user agreed to that? You have no signature, video, or audio proof. PSN accounts generally remain logged-in, and it's possible someone other than you agreed to the EULA and upgraded your PS3's firmware, like a guest or roommate, without your knowledge or permission.
If you approach class-action lawsuits from the standpoint of "what good comes of it for the individual" there's not a big change and I've heard that we could expect more people (who put up with the process) would be more likely to get some award and that such an award is likely to be higher than what they'd get from a class-action suit. 
But if you approach class-action lawsuits from the standpoint of "what punishment does the misbehaving corporation suffer", mandatory individual arbitration is a tragedy.  It's implausible for the legal investigation into the corporation to approach the same level and implausible for the net penalty to even remotely approach that of a class action suit. The corporation is already heavily favored in any legal battle and individual arbitration simply compounds that advantage. And PR damage done from having said bad behavior exposed to the market at large is no longer a concern. In short: the penalty for misbehavior is massively reduced.
As to "how do you know the end-user agreed to that": click-through EULAs have also been upheld by US courts for some time. Though I don't believe the SCOTUS has addressed them directly just yet.
 I've read that multiple studies have found arbitration as having a higher and more frequent payout rate for complainants than class action lawsuits. I won't vouch for that position, but I don't take issue with it, as those results are largely irrelevant from my viewpoint.
 Yes, there is a ton of progress that could be made on the question of how that penalty gets distributed. But I believe it's far more important to address that issue on its own than to effectively end class-action suits.
And that's why we need a more liberal supreme court.
A clause that prevented any right of action whatsoever would most likely be illegal in many countries (including, I think, all EU countries, the US and Australia/NZ).
However, "binding arbitration" clauses which require parties to submit to alternative dispute resolution procedures before any legal action is taken are actually quite common (perhaps more common in Aus/NZ, the UK and the EU than in the US?). They're a common feature of mobile phone contracts, internet contracts, et cetera.
Edit: I see this question has been given excellent treatment here: http://news.ycombinator.com/item?id=3001086
Oh, wait. Nevermind.
Thanks for the clarification Sony.
The point is that Sony is disclaiming responsibility for anything it does wrong.
It's like saying, "Well, I'll work as an engineer for you, but I refuse to be held responsible if the bridge collapses." Even the nuttiest libertarian could find reasons to pass laws forbidding that kind of contract. And even if it's legal, I wouldn't drive on that bridge. (Or would I? If everyone does it and it looks safe enough...)
This is even worse when I think about it. It's more like buying a plane ticket, being in the airport, and suddenly the pilot goes "I am not legally liable if I crash the plane while I'm drinking on the flight."
nope. you can still go to arbitration or small claims.
If I leave an outdated version of SSH open to the internet, allow root login, password authentication, and set it to 'p4ssw0rd', then I'd fully expect to suffer some consequences.
I'm sure it didn't actually happen that way, but it's funny how it fits the observed behavior if you look at it a certain way. It's not like people would be any happier with them if they'd kept exactly the same set of business practices as goes on in Japan.
Basically, leaves non-security-aware people out in the cold. Instead of trying to champion good security practices and locking down their shit, they are saying "this is a glory hole, buyer beware" in a document that no one reads.
Also, Microsoft's dickish behavior makes the for-pay Xbox Live service worse than the free version of PSN (e.g. updates get held in limbo and publishers are forced to charge for them even though Microsoft isn't providing the servers or bandwidth AFAIK).
For the playstation/xbox, go where the fun is. Don't support a company out of misplaced "loyalty" because in the end, it just slows free market progression.
I think most of the people bitching about the things happening to Playstation don't actually own a PS3. But as an owner I can tell you I really didn't care about the security breach, perfectly satisfied that they gave me 2 free games, and have not experienced any issues running my PS3 without connecting to the PSN. The fact is, it's not out of loyalty, it's simply because the PS3 has been a great product for me (believe it or not).
Oddest sentence I've ever read.
Hopefully they're not storing these waivers in plaintext.
But basically they are saying that they are not willing to put their reputation and money behind their own business which makes you wonder....
IANAL, but arbitration clauses are standard in contracts at least in the United States. Arbitration is generally seen as preferred because suing people in court is actually very expensive for the plaintiff, the defendant, and the court system.
In Sony's favor, Sony excluded small claims. So for pretty much everyone this arbitration clause is meaningless. The limit for small claims is in the thousands of dollars depending on state . The circumstances where Sony would be liable for more than a few thousand to a single consumer would have to be pretty extraordinary. And yes, this includes losses due to identity theft. Although the expenses due to fraud can be high, the out of pocket damages to the individual are generally very low. As of 2006 the average out of pocket expenses were about $422 and on a downward trend . Keep in mind that the federal government limits liability for credit card fraud to only $50 in the United States . And most credit card companies actually limit the liability to $0. The actual costs of fraud end up getting absorbed by businesses as the financial institutions try to unwind the transactions as best it can.
Also in Sony's favor, Sony did not choose to use the arbitration clause to set an onerous jurisdiction. Sony could have said all arbitration needed to take place in a specific city in the middle of nowhere. Sony didn't even pick the location of its headquarters; you can pick any jurisdiction. Most arbitration clauses I've seen set a jurisdiction that favors the contract writer, so I'd say this puts Sony in a decent light for not doing the same.
Likewise, Sony does not cap damages awarded through arbitration. It could have easily set the maximum damages to some amount that would make arbitration a non-starter compared to small claims.
If you really wanted to find fault with Sony's particular arbitration clause, it would be that neither side can appeal the decision of the arbitration panel to a higher court. But keep in mind this cuts both ways, and it really isn't unusual. It is even endorsed in the United States.
I should also note that arbitration clauses can be voided if the panel can be proven to be biased. So this isn't necessarily a license for Sony to circumvent the law, at least against a well funded opponent. And anyone with the balls to sue Sony for any serious amount of money would be a well funded opponent.
NB. I understand arbitration clauses such as this may not be legal in some countries such as Germany. Whether that is good or bad I can't say. I'm sure the Germans thought it was good, though.
ADDED: Responding to a comment I read further down the stack; as for "punishing the company", in reality you are only "punishing" those who buy from them since they will just increase the price to cover the expected cost of dealing with suits.
If a suit wasn't expected, so they hadn't built it into the price, or other companies were keeping their prices low enough that they couldn't raise their prices, it might actually hit their stock price or dividends. Since, from comments from many PlayStation owners suggest neither is the case, my point that class action suits will just benefit lawyers and raise prices for PS users stands.
>as for "punishing the company", in reality you are only "punishing" those who buy from them since they will just increase the price to cover the expected cost of dealing with suits.
Well, I guess there's nothing we can ever do to a company then! Wouldn't want them to raise prices.
If they would actually protect their customer's data well, they wouldn't get sued for security breaches in the first place.
While 100% security is impossible, they only need to secure their data so they can't get sued for neglecting to secure it enough.
Yes, I know, we all miss DLC...
And really, if you use anonymous gift cards (or no payment information), you have the option to not even give them your real personal information, never mind your financial information.
That way there's literally nothing to steal other than the account itself.