Amazon customers can now take the retail giant to court because of their recent change in their terms of service. But it looks like it's more for their favor than their customers'.
What Are Arbitration Cases?
Arbitration is a private dispute resolution procedure in which the cases are handled by a third party instead of a judge or jury, The Verge explained. This is a viable option for companies in many ways, but mostly it offers privacy from potential legal exposure.
The Wall Street Journal reported that companies have been using arbitration proceedings to avoid plaintiffs, those filing a case against companies, from teaming up and extracting large sums like in class action lawsuits.
Consumers and employees are usually only given the option to file for arbitration when they have claims against the company. The U.S. Supreme Court has supported and strengthened the rights of companies to mandate arbitration, says The Wallstreet Journal.
Customers and users can find arbitration agreements somewhere in the contracts signed or the terms and conditions they agree to for just about anything--from buying electronics or using a ride-hailing app.
A Mass Arbitration Changes Amazon Terms of Service
More recently, lawyers were able to coordinate more than 75,000 Echo users to file a mass arbitration case against Amazon.
The claims against the retail giant started coming in when news reports in 2019 said that Alexa devices stored recordings of users, The Wall Street Journal noted. Consumers were horrified by this discovery and sought for a class action lawsuit. Amazon was able to argue that the claims belonged in arbitration, and not in the courtroom.
This actually led to tens of thousands of claims being sent to Amzon all at once and has left the company with millions of dollars in fees, The Verge added. Companies like DoorDash, Uber, and Intuit also faced mass-arbitration filings that they tried to redirect to court to avoid paying filing fees, but some courts bring it back to arbitration in the end.
Amazon's Terms of Service change was reportedly done on May 3rd when the company's conditions of use page was said to be updated.
The once detailed, 350-word explanation of the needed requirements and how to process arbitration claims is now scrapped. Instead, found on the Amazon website is the updated subsection that now reads only two sentences: "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, and you consent to exclusive jurisdiction and venue in these courts. We each waive any right to a jury trial."
This new change can now allow Amazon to avoid paying such steep fines in settlements and service fees in the future.
Despite the radical change Amazon has made to their terms of services, it is unknown if other companies are willing to adopt such a change. Adam Zimmerman, a professor at Loyola Law School who studies class actions, told WSJ it is unlikely a wave of change will be seen in how businesses conducts disputes.
Lawsuits lead to legal exposure and evidently media exposure, which may damage the company in the long run.