Amazon has reinstated binding arbitration and prohibited class-action lawsuits
Amazon on Friday reinstated binding arbitration for its U.S. customers, simultaneously prohibiting them from pursuing class-action lawsuits, thereby complicating the process for users to resolve grievances in court.
In emails sent on Friday, Amazon announced that the changes are effective immediately, and customers consent to the terms by continuing to use the company’s services. Companies frequently notify customers about impending modifications to their terms of service well in advance.
Amazon previously stated that customers should seek legal claims in court in Washington state, where the company is headquartered. Five years ago, Amazon eliminated binding arbitration after encountering tens of thousands of expensive individual cases. “We determined that reinstating the arbitration clause will offer customers a fast, cost-effective way to resolve disputes while still giving them the option of going to small claims court,” a spokesperson said in a statement.
In 2021, Amazon faced approximately 75,000 arbitration claims from customers alleging that its Alexa service recorded them without their consent. This situation was part of a strategy employed by certain law firms to inundate corporations with arbitration claims, compelling them to incur millions of dollars in fees to initiate the process and creating significant administrative challenges.
Amazon stated in its updated terms that 25 or more arbitration cases concerning the same issue within a six-month timeframe would be classified as a “mass arbitration” and would be resolved in “batches of at least 25.
Courts have typically favored corporations regarding the language in their terms of service that outlines the conditions under which customers may seek legal recourse. Arbitration cases are resolved privately with the involvement of a third-party adjudicator, which means that disputes and any resulting settlements are generally not disclosed to the public.
Disputes with Amazon, including class-action suits, that began before Friday are not affected by the new terms.
