Amazon did the math and would rather be sued

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Amazon recently changed its terms of service to allow its customers to file lawsuits against the company instead of going through an arbitration process. According to The Wall Street Journal, the company made the change after more than 75,000 Echo users were organized to file individual arbitration cases, which would have landed Amazon millions of dollars in fees.

Unlike lawsuits, arbitration cases are heard by a third party rather than a judge or jury. According to the The Rules of the American Arbitration Association (to which Amazon was bound in its old terms of service), the company involved is responsible for hundreds, sometimes thousands, of dollars in fees when a consumer files a case against them — and those numbers quickly add up if a law firm is able to coordinate large numbers of consumers. to file complaints at the same time.

We’ve seen massive arbitration before in efforts to pressure tech companies (often with the goal of getting those companies to remove the aforementioned arbitration clauses from their employment contracts). Both Uber and DoorDash have dealt with thousands of disputes from their employees. As consumers and employees seem to suspect the possibility of using arbitration clauses to their advantage, it appears that the change to Amazon’s terms of service is more self-serving: win or lose, a class action lawsuit is very likely less expensive for the company. .

that of Amazon terms of use page says it was last updated on May 3, 2021. As of May 1, according to the WayBack machine, the “Disputes” subsection explained in detail the process users would have to go through if they wanted to file a claim against the company. It also made it clear that Amazon is responsible for paying accountant fees for claims less than $10,000 unless the claim is declared frivolous. Now the dispute section reads:

Any dispute or claim in any way related to your use of any Amazon service will be resolved in the state or federal courts located in King County, Washington, and you consent to exclusive jurisdiction and venue in such courts. We all waive any right to a jury trial.

The updated terms of service also remove the requirement that users agree to the Federal Arbitration Act to use Amazon services.

That last bit about waiving the right to a jury trial may be unusual for tech company ToS agreements, but as an alternative to arbitration it’s certainly been tried in other industries – though some states have found such clauses be unenforceable.

While Amazon’s customers may no longer have to go through arbitration, some of her flex workers are currently fighting for the opportunity to sue the company, despite their arbitration agreements.

It’s also worth noting that certain consumer cases were able to bypass arbitration before the change — Amazon is currently being sued over allegations that some of its Alexas devices have been recording audio from minors. Judges have ruled that the case did not need to go to arbitration because the minors disagreed with the terms of service. However, Amazon’s change opens the gates to other lawsuits that also need to be heard in court, and it will help the company avoid costly mass arbitrations in the future.