On November 1st, PayPal will follow Sony, Microsoft, Netflix, and many others in banning class action lawsuits by customers. Its new terms of service require any disputes between a user and PayPal to be resolved with arbitration, or in small claims court if they qualify. Unless users send a written opt-out notice, they’ll be barred from group suits in the US, something that’s become increasingly common for companies since last year. Stopping class action suits is sometimes an abstract worry, but PayPal has a history of legal challenges

In some cases, these clauses pose mostly an abstract concern for customers of a beloved company. Valve, for example, introduced a similar change in August, barring its Steam users from suing collectively. But PayPal manages money rather than building consumer products, and it’s widely criticized by users. High-profile customers — from Minecraft developer Markus Persson to Regretsy’s April Winchell — have blasted its review policies and customer service, the latter after PayPal shut down a Christmas charity drive, kept a portion of the funds, and then attempted to freeze the account. While these problems are usually resolved within a few days, PayPal is also no stranger to class action suits. In 2010, two separate groups filed against it, alleging that the company violated consumer protection laws by holding funds for up to 180 days without explanation. Those suits are tentatively being settled, but it’s doubtful they would have been the last. So what does this mean for the people who use PayPal and other services?

There’s a simple reason why PayPal and others are making these changes: because they can Firstly, there’s a simple reason why PayPal and others are making these changes: because they can. Until relatively recently, states could require companies to allow class action lawsuits in their terms of service. While not every state did so, the result was that companies wrote agreements to accommodate the strongest consumer protection laws and applied them across the board. In the April 2011 decision AT&T Mobility v. Concepcion, however, the Supreme Court ruled that the Federal Arbitration Act took precedence over state laws, letting companies add clauses that limit lawsuits as they see fit. Since then, these clauses have steadily been added to terms of service and licensing agreements, taking away the user’s right to participate in a class action lawsuit.

Most companies have been open about the fact that they’re changing policies in response to the court case, but they insist that it’s better for customers as well. In a statement to The Verge, PayPal said that the change "encourages swift and reasonable resolution as opposed to litigation, which can be protracted, expensive and often dissatisfying to customers;" its parent company eBay has already adopted similar rules. After announcing its own change, Microsoft touted revamped arbitration provisions, which it said would be "among the most generous in the country." And Valve argued that many class action suits "don’t provide any real benefit to users and instead impose unnecessary expense and delay, and are often designed to benefit the class action lawyers who craft and litigate these claims." "Class action is the only way people will get their money back."

Paul Bland, a senior attorney at law firm Public Justice, tells another story. In 2005, Bland argued Discover Bank v. Superior Court, a California class action case that was overruled by Concepcion. He calls the decision to allow clauses banning class action suits "unbelievably disastrous" for consumers. "Tons of consumer disputes should be handled individually," he says. "There are a lot of disputes where small claims court works fine." But he says class action suits can do two things that arbitration or individual claims can’t: in situations involving smaller amounts of money or a problem that’s complicated or obscure (like a misleadingly labeled set of fees), a class action suit can get results when few people would put in the time or money otherwise. In those cases, Bland says "class action is the only way people will get their money back." Class action suits are also more likely to lead to widespread policy changes at a company, according to Bland, and the move away from them "makes it impossible for anyone to get injunctive relief" to stop an abusive practice through legal channels.

Not every company can ban class action suits, but it's becoming standard practice Not every business can ban class action suits. Individual exceptions in separate laws let consumers bring them against insurance companies, mortgage loan providers, and (if you’re a member of the military) payday lenders. Other consumer protections still apply across the board. But for most companies, it’s common now to add a clause banning group suits, and we’re likely to only see more of them in the coming years.

There is, however, one bright spot in this latest change: unlike Valve or Microsoft, eBay and PayPal are letting users opt out. Customers who accept the terms of service for the first time have 30 days to mail a written notice, and anyone who’s already signed up must send one by December 1st. That’s certainly not convenient, and Bland argues that it’s probably in place to stop users from challenging the clause, with the companies betting that "almost none of their consumers is going to read the fine print." At the same time, it means that users of PayPal or eBay have a chance to keep the right to a class action suit without trading off any benefits. For consumers, it’s far from a perfect solution. But with the legal right to collective action gone, it may be the best they can hope for.