Amazon blocks customers from taking most disputes to court

Amazon reinstated binding individual arbitration, forcing its US customers to waive their right to participate in class-action lawsuits.

The company sent notification emails on Friday, informing customers that the changes were effective immediately and that continuing to use Amazon’s services meant accepting the new terms.

Amazon removed its binding arbitration clause in 2021 after being flooded with tens of thousands of individual arbitration claims that reportedly cost the company millions.

The company previously directed its customers to pursue legal claims in court in Washington state, where Amazon is based.

"We determined that reinstating the arbitration clause will offer customers a fast, cost-effective way to resolve disputes while still giving them the option of going to small claims court," a spokesperson said in a statement, according to Reuters.

Disputes and class-action lawsuits filed before the changes took effect will not be affected by the updated terms.

In 2021, roughly 75,000 customers brought arbitration claims against Amazon over its Alexa voice assistant, which they alleged recorded them without consent.

Amazon's terms said customers couldn't band together in a class action, so some law firms found a workaround by filing tens of thousands of individual arbitration claims at once.

Under Amazon’s new terms, 25 or more similar arbitration claims filed within six months will qualify as a “mass arbitration” and be handled in “batches of at least 25”.

According to Reuters, unlike court proceedings, disputes and any settlement from arbitration cases “typically are not made public”.

Amazon’s Prime Terms & Conditions were updated “to follow the same dispute resolution procedure.”