Amazon reinstates binding arbitration, bars class-action lawsuits

By Greg Bensinger

Aug 14 (Reuters) - ‌Amazon on Friday ​reinstated ​binding arbitration for its U.S. customers while also barring them from seeking class-action lawsuits, making it more difficult for users ‌to address grievances in court.

In emails on Friday, Amazon said ⁠the changes are effective immediately and customers agree to the terms by continuing to use ‌the company's services. Often, companies ‌alert customers to upcoming changes to their terms of service weeks in advance.

Previously, Amazon said customers should pursue legal claims in court in ​Washington state, where Amazon is based. Five years ago, Amazon revoked binding arbitration after facing tens of thousands of costly individual cases.

"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.

In 2021, Amazon ​was flooded with around 75,000 arbitration claims ‌from customers claiming its Alexa service was recording them without their consent. It was part of a tactic some ⁠law firms use to overwhelm corporations with arbitration claims, forcing them to pay millions of dollars in fees to start the process and causing administrative headaches.

Amazon ⁠said in its new terms that 25 or more arbitration cases relating to the ​same matter in a six-month period would be considered a "mass arbitration" and would be settled in "batches of at least 25."

Courts have generally sided with corporations over language in ‌their terms of service that dictate when and how customers can pursue legal recourse. Arbitration cases are settled privately ‌before a third-party adjudicator, meaning disputes and any settlement typically are not ⁠made public.

Disputes with Amazon, including ‌class-action suits, begun prior ​to Friday are not impacted by the new terms.

(Reporting by Greg Bensinger in San Francisco; Editing by Lisa Shumaker and ‌Rosalba O'Brien)

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