Amazon makes it harder for customers to sue as new terms block class actions and force arbitration

Amazon has introduced new terms of use that make it significantly tougher for US customers to pursue legal action against the company. The revised Conditions of Use, which took effect immediately on Friday, ban class-action lawsuits and require customers to resolve disputes through mandatory arbitration instead of going to court.

This change means that any issue related to Amazon services, products, or sales on Amazon.com must now be handled privately through binding arbitration. The arbitrator's decision can only be challenged in limited circumstances, and customers can still bring eligible cases to small claims court. However, the new agreement also includes a class action waiver, preventing customers from joining forces in collective legal actions.

This move could make it much harder for individuals with small losses to pursue claims, as the potential payout may not be sufficient to justify the time and cost of bringing a case on their own. Furthermore, the arbitration process occurs behind closed doors before a neutral third-party, keeping the dispute and any settlement confidential.

Amazon claims that this streamlined approach offers customers a swift and cost-effective way to resolve complaints while still providing a small claims option. The company has also implemented measures to handle large numbers of similar arbitration cases, treating 25 or more demands concerning the same matter within six months as a mass arbitration and resolving them in batches of at least 25.

Amazon's decision to drop its previous arbitration requirement in 2021 followed numerous individual complaints from customers accusing Alexa of recording them without consent. These lawsuits were filed individually, leading to millions in initial fees and a substantial administrative burden for the company. For the past five years, Amazon's terms directed customers to seek redress in Washington state courts, where the company is based.

The new rules reverse this approach, applying immediately to all disputes, though lawsuits and class actions filed before August 14 remain unaffected. Customers and their attorneys can still attempt to file class actions, and Amazon can subsequently ask a court to enforce its new agreement. While judges have generally upheld corporate arbitration clauses, the ultimate decision will depend on whether Amazon's terms successfully block each individual case.