Amazon makes it easier to sue after deluge of arbitration claims

Amazon has quietly changed its terms of service to allow customers to file lawsuits after it received a deluge of arbitration demands, according to The Wall Street Journal. The company’s disputes resolution policies for customers previously directed them to place their complaints in a secret tribunal. These so-called arbitration proceedings are typically used by companies to prevent potentially damaging decisions in court. Amazon is facing three proposed class actions, which could result in large payouts to multiple plaintiffs, including one filed in May accusing it of recording Echo users without permission.

The company reportedly changed its policy after resourceful lawyers inundated it with more than 75,000 individual arbitration demands on behalf of Echo users. The claims were filed in early 2020 in the wake of news reports that Amazon’s Alexa devices were storing recordings of users. Lawyers told WSJ that the move straddled the online retailer with a bill for tens of millions of dollars in filing fees. 

In May, Amazon attorneys reportedly told the plaintiffs’ lawyers of the change in its terms of service. The company’s original disputes clause stated: “The arbitration will be conducted by the American Arbitration Association (AAA) under its rules, including the AAA’s Supplementary Procedures for Consumer-Related Disputes.

“Amazon and you each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action.” The amendment has replaced what was once a 350-word description of its arbitration requirement with two sentences saying disputes can be brought in state or federal courts in King County, Washington.

Amazon told WSJ some of the claims have been withdrawn or ended in the company’s favor. It added that its Echo devices only record when in use and that customers can delete the recordings or choose not to have them stored.

The update follows growing pressure on Big Tech companies to end their use of forced arbitration. Earlier this year, an Amazon seller complained to lawmakers of its unfair policy of using secret tribunals to settle disputes. Jacob Weiss told the House Judiciary subcommittee on antitrust that he spent thousands on arbitration fees and recovered little of what he lost. Last year, House Democrats on the antitrust committee recommended eliminating forced-arbitration clauses and limits on class-action lawsuits in a report on digital markets.

For its part, Google ended its mandatory arbitration policy for employees following internal protests over its response to sexual harassment claims. Around 20,000 of the tech company’s global workers participated in walkouts amid the #MeToo movement in 2018.