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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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2 thoughts on “Amazon Quietly Changes Terms of Service Dropping Mandatory Arbitration”

  1. This is pretty much the only way that anything like this will get changed. Companies have to believe that arbitration is more costly than a court case, which isn’t likely unless you are literally Amazon.

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