US: Customers can't file class-action lawsuits against Amazon anymore
What's the story
Amazon has reintroduced binding arbitration for its US customers, effectively barring them from filing class-action lawsuits. The move makes it more difficult for users to seek legal recourse in court. The changes were announced in an email from the company on Friday and are effective immediately. By continuing to use Amazon's services, customers agree to these new terms.
Policy shift
Cost-effective way to resolve disputes, says Amazon
Earlier, Amazon had asked customers to take their claims to court in Washington state, the company's home base.
Five years ago, it had removed binding arbitration after being inundated with tens of thousands of expensive individual cases.
Now, a spokesperson for the company has said that reinstating the arbitration clause will provide customers with a quick and cost-effective way to resolve disputes, while still allowing them access to small claims court.
Claim volume
Amazon was previously inundated with tens of thousands of claims
In 2021, Amazon was hit with some 75,000 arbitration claims from customers who alleged that Alexa recorded them without their consent.
The tactic is used by law firms to inundate companies with arbitration claims, forcing them to shell out millions of dollars in fees.
Under the new terms, if there are 25 or more arbitration cases related to the same issue within a six-month period, it would be considered a "mass arbitration" settled in "batches of at least 25."
Dispute resolution
Courts generally side with corporations over legal recourse language
Arbitration cases are settled privately before a third-party adjudicator, meaning disputes and any settlement typically aren't made public.
The new terms don't affect disputes with Amazon, including class-action suits, that began prior to Friday.
Notably, courts have generally sided with corporations over language in their terms of service, dictating when and how customers can pursue legal recourse.