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Amazon Quietly Changes Terms of Service Dropping Mandatory Arbitration

In a move consumer advocates never thought they would ever see, a major company, Amazon, has dropped from its terms of service the mandatory arbitration clause to settle disputes. This now allows Amazon customers to sue them in court and be part of class action lawsuits.

The change occurred on May 3, 2021, with no announcement or fanfare, as first reported last week by the Wall Street Journal.

The new language in Amazon’s “conditions of use” is short and sweet.

*MOUSE PRINT:

DISPUTES
Any dispute or claim relating in any way to your use of any Amazon Service will be adjudicated in the state or Federal courts in King County, Washington, and you consent to exclusive jurisdiction and venue in these courts. We each waive any right to a jury trial.

The change came about because some brilliant consumer lawyers used Amazon’s old mandatory arbitration rules to their own advantage. Those rules provided that Amazon would cover consumers’ arbitration filing fees. So what did these lawyers do? They filed 75,000 arbitration cases on behalf of Amazon Echo owners complaining that the smart speakers recorded users without their permission. That move triggered a bill for tens of millions dollars in filing fees that Amazon was asked to pay.

For reference, here is Amazon’s old rule mandating arbitration of claims:

*MOUSE PRINT:

DISPUTES
Any dispute or claim relating in any way to your use of any Amazon Service, or to any products or services sold or distributed by Amazon or through Amazon.com will be resolved by binding arbitration, rather than in court, except that you may assert claims in small claims court if your claims qualify. The Federal Arbitration Act and federal arbitration law apply to this agreement.
…
Payment of all filing, administration and arbitrator fees will be governed by the AAA’s rules. We will reimburse those fees for claims totaling less than $10,000 unless the arbitrator determines the claims are frivolous. [Emphasis added]
…
We each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action. If for any reason a claim proceeds in court rather than in arbitration we each waive any right to a jury trial.

What doesn’t quite make sense is that Amazon’s old rule only promised to reimburse consumers’ filing fees and not that they would pay them upfront. So we asked the consumer lawyer who filed these tens of thousands of arbitration cases and then billed Amazon for millions in filing fees to explain if he really laid out all that money from his own pocket to file these cases. He did not respond.

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Advertising Masquerades as Program Content on Local TV Shows

Over the years, we have repeatedly spotlighted examples of national television programs that broadcast stories or segments where they were “secretly” being paid by the subject featured and pretty much kept viewers in the dark about that practice:

  • Bargain segments on Good Morning America, The Today Show, and The View;

  • Health segments on Inside Edition pitching cosmetics;

  • Doctor segments on The Talk pitching cosmetics;

  • Health insurance information segment on Dr. Phil.

    These types of shenanigans are not limited to national talk shows. A recent episode of John Oliver’s This Week Tonight gave example after example of local television program segments bought and paid for by the subject of the broadcast with often poor disclosure of that fact to the viewing audience.

    To demonstrate how some local stations will just blindly broadcast informational segments by anyone willing to pay the price, his producers created a phony product — the Venus Veil sexual health blanket — a medical blanket infused with magnetic fibers that claimed to stimulate blood flow for improved sexual performance and pleasure. And believe it or not, three local television stations in Utah, Texas, and Colorado actually broadcast interviews with a spokesperson for this phony product. [Warning: this video contains coarse language.]

    To see the elaborate lengths that this program went to in order to create a phony product and get it aired on local stations, visit Venus Inventions.

    When real products are being featured on local television, the consumer issue is whether the product’s maker has paid for the appearance and if the viewing audience has been adequately made aware of that fact. Viewers have a right to know if they are really watching a commercial rather than a regular program feature. At least at these local stations, not much appears to have been done to vet the product shown, and it is unclear how well the audience was informed that this was sponsored content.

    Under the FCC’s “payola” rules, if a program’s producers receive payment to feature a product, that fact must be disclosed to viewers during the program. Similarly, the FTC has two sets of advertising guidelines. They both require clear and timely disclosure — in other words, no mouse print if (1) there is any financial connection between a presenter and the products being touted (endorsement and testimonial guidelines) and (2) the presentation looks like a regular part of the program but is in fact commercial in nature (native advertising guidelines). Of particular relevance is the FTC’s Enforcement Policy Statement on Deceptively Formatted Advertisements.

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    Hefty Recycling Bags Not Recyclable

    A class action lawsuit was filed earlier this month against the makers of Hefty Recycling bags alleging that their bags are not recyclable.

    Hefty recycling bags

    On the back of the box, the company claims the “bags are perfect for all your recycling needs.” And in a commercial on the Hefty website, they show that the bags can be filled with recyclables and put out at the curb or in your recycle box.

    Hefty recycling
    Click above to watch ad

    *MOUSE PRINT:

    The disclaimer, which is only on the screen for two seconds, says you need to check with your locality if you are actually allowed to put recyclables in plastic bags for pickup curbside. And an inconspicuous statement on the back of their boxes says that the product was developed for use in municipal recycling programs where applicable.

    According to various recycling information sites, only a small number of cities and towns allow it because plastic bags tend to get caught in the sorting machines.

    Don't recycle in bags

    Although neither the product box nor the advertising explicitly says the bags themselves are recyclable, the lawyers contend that because the bags are explicitly used for recycling purposes that consumers will reasonably infer that the bags themselves are recyclable too. They also say that bags are made of a type of plastic that for practical reasons is not recyclable and may wind up in a landfill along with their contents.

    Under the FTC’s Green Guides, sellers cannot claim directly or indirectly that their products are recyclable when such is not the case.

    § 260.12 Recyclable Claims.

    (a) It is deceptive to misrepresent, directly or by implication, that a product or package is recyclable.

    Reynolds, the maker of Hefty bags, did not respond to a request for comment in published stories.

    We will have to wait to see if the company is able to get the case tossed out.

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