Amazon Forces Users To Arbitrate Disputes, Waiving Court Rights
US users who continue to use Amazon will waive their right to a class action, with disputes now required to go through customer service and binding arbitration, in a bid to reduce legal costs
Amazon has updated its terms of use to require customers to resolve disputes through binding arbitration, rather than court, and to first attempt to resolve issues through customer service. This change, which took effect last Friday, means that any US user who continues to use Amazon is waiving their right to a class action.
The updated terms of use establish a clear procedure for resolving disputes, with customers required to first attempt to resolve issues through customer service, followed by a 60-day dispute resolution procedure, before proceeding to binding arbitration. This approach is designed to encourage out-of-court settlements and reduce the company's legal costs.
Amazon had previously removed binding arbitration from its terms of use in July 2021, in response to a mass arbitration of roughly 75,000 claims related to Alexa recording customers without consent. At the time, the company faced a significant legal bill, with estimates suggesting that a single claim would cost around $2,900 just to hire the arbitrator.
The new terms of use also establish parameters on mass arbitration, with claims grouped in batches of 25, 100, and 500, depending on the total number of claimants with similar issues. Each batch will be assigned one arbitrator and one set of administrative fees, in an effort to streamline the process and reduce costs.
## Why it matters The move to binding arbitration is significant, as it limits the ability of customers to take Amazon to court. By requiring customers to waive their right to a class action, Amazon is effectively reducing the risk of large-scale lawsuits and the associated legal costs. This change is likely to have a major impact on the way that customers interact with the company, and may lead to a reduction in the number of disputes that are taken to court.
The stakes are high, with Amazon facing significant legal costs if disputes are not resolved efficiently. By establishing a clear procedure for resolving disputes and limiting the scope for mass arbitration, the company is taking steps to protect its interests and reduce its exposure to costly lawsuits. As a result, customers will need to be aware of the new terms of use and the implications for their ability to seek redress through the courts.
