​​Amazon Allows for Class Action Litigations, Axes Arbitration Clause

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Tech and retail giant Amazon has made an unexpected move in axing its arbitration clause, a common clause for consumer facing companies, instead allowing for dispute resolution through the courts.

The company announced the move in an email to customers last week, adding that customers were told Amazon had updated its Conditions of Use — which all consumers must agree to, Law360 reports.

As part of the changes which govern all Amazon services including the e-commerce site, music and video streaming services, and Echo smart devices, all mentions of arbitration have been removed.

“One of our updates involves how disputes are resolved between you and Amazon,” the company said in the email.

“Previously, our Conditions of Use set out an arbitration process for those disputes. Our updated Conditions of Use provides for dispute resolution by the courts.”

As part of the new terms, consumers consent to the “exclusive jurisdiction and venue” set by Amazon and waive any rights to a jury trial. 

“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,” where the company is based, the terms state.

The company “continually updates our Conditions of Use based on the evolving nature of our business; customers agree to these Conditions by using our services,” a spokesperson for Amazon told Law360.

Amazon has said in the past that it “works hard” to resolve consumer issues and, because its customer service team is available around the clock via phone and chat, “the vast majority of customer concerns are resolved quickly and informally.”

However, the retail giant is currently facing more than 74,000 individual arbitration claims submitted to the American Arbitration Association on behalf of consumers, most alleging the improper collection of their communications through its Alexa voice activated speakers, Law360 reports. Amazon would have to pay for private arbitrators to hear the disputes, which would be costly for the company.

Keller Lenkner LLP partner Warren Postman, who’s representing minors in private litigation accusing Amazon of retaining voice recordings without their consent, told Law360 that arbitration clauses like the one Amazon had were fairly common among consumer-facing companies to discourage class actions and legal disputes in general.

“These arbitration clauses have become boilerplate in consumer contracts,” Postman said. “But now that Amazon has eliminated that clause, everyone can go ahead and file the cases in federal court that they were worried about filing.”

This is not the first time Amazon has faced an arbitration issue amongst its consumers. In 2014, the tech and retail giant submitted a motion to dismiss a class action lawsuit over alleged hidden charges, arguing that under its Terms and Conditions, all potential Class Members are compelled to enter arbitration over the allegations.

Would you prefer to face a company in court or through a private arbitrator to settle a dispute? Let us know your thoughts about this change in the comments section!

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