Amazon Bars Class-Action Lawsuits

Amazon has reinstated a clause in its user agreement that requires customers to resolve disputes through binding arbitration, effectively barring class-action lawsuits. The clause, which also includes a class-action waiver, prevents customers from seeking class-action lawsuits, but still allows them to file small-claims cases, typically limiting damages to a few thousand dollars.

The changes to the user agreement are effective immediately, and customers agree to the terms by continuing to use the company's services. This move comes after Amazon had removed a similar clause from its user agreement in 2021 amid a barrage of legal privacy challenges related to its voice-activated Alexa devices.

In 2021, Amazon was flooded with around 75,000 arbitration claims from customers claiming its Alexa service was recording them without their consent. The company's new terms would seek to resolve larger disputes through mass arbitration rather than mandatory 1-on-1 arbitration hearings.

However, the agreement might not hold up in court, and plaintiffs and attorneys could still seek class action suits, with a judge deciding whether to let the case proceed. Disputes with Amazon, including class-action suits, begun prior to the introduction of the new terms are not impacted by the new terms.

## Why it matters The reinstatement of the binding arbitration clause has significant implications for Amazon customers, as it limits their ability to seek legal action against the company through class-action lawsuits. This move is likely to give Amazon greater legal protection against plaintiffs' attorneys, but may also raise concerns among customers about their ability to seek redress for any grievances they may have with the company.

The use of binding arbitration clauses is not unique to Amazon, but the company's decision to reinstate it has sparked concerns about the impact on consumer rights. As one of the world's largest e-commerce companies, Amazon's actions are likely to be closely watched by consumers, regulators, and other companies alike.