Amazon Reinstates Binding Arbitration, Bars Class-Action Lawsuits

Amazon has reinstated binding arbitration for its U.S. customers and barred them from filing class-action lawsuits, making it more challenging for users to pursue grievances through the court system. The changes took effect immediately, and customers agree to the terms by continuing to utilize Amazon's services. Typically, companies notify customers of upcoming changes to their terms of service weeks ahead of time.

Previously, Amazon allowed customers to seek legal claims in court in Washington state, where Amazon is headquartered. Five years ago, Amazon abandoned binding arbitration after facing a significant number of costly individual cases. Amazon's spokesperson stated that reinstating the arbitration clause would provide customers with a swift and cost-effective means to resolve disputes while still maintaining the option to pursue small claims court.

In 2021, Amazon received approximately 75,000 arbitration claims from customers alleging that its Alexa service was recording them without their consent. This tactic was employed by some law firms to overwhelm corporations with arbitration claims, resulting in millions of dollars in fees and administrative difficulties for the companies involved.

Amazon's new terms indicate that 25 or more arbitration cases related to the same matter within a six-month period would be classified as "mass arbitration" and would be settled in batches of at least 25. Courts have generally upheld the validity of such language in terms of service agreements, dictating the circumstances under which customers can seek legal recourse.

Arbitration cases are resolved privately through a third-party adjudicator, meaning disputes and any settlements are not made public. Disputes with Amazon, including class-action suits, initiated prior to Friday are unaffected by the new terms.