Amazon recently changed its terms of service to allow its customers to file claims against the company instead of having to go through an arbitration process. The company made the change after more than 75,000 Echo users were organized to file individual arbitration cases, which would have forced Amazon to pay millions of dollars in fees. Unlike litigation, arbitration cases are handled by a third party rather than a judge or jury.
Under the rules of the American Arbitration Association (which Amazon complied with the old terms of service), the company in question is liable for hundreds, sometimes thousands of dollars in fees when a consumer sues them. These numbers increase rapidly if the law firm is able to coordinate large numbers of consumers to file complaints at once.
Class arbitration procedures have appeared before in attempts to pressure tech companies. Given that consumers are using arbitration terms to their advantage, it appears that changing Amazon's terms of service may be more beneficial to its self-interest, and it is very likely that a class action will cost less for the company.
Amazon allows sue
The Dispute Section said, any dispute or claim relating in any way to your use of any Amazon Service shall be adjudicated in the state or federal courts in King County. You agree to the exclusive jurisdiction and venue of these courts. Each of us waives any right to a jury trial.
The updated Terms of Service also remove the requirement for users to agree to the Federal Arbitration Act in order to use any Amazon Services. It is also worth noting that some consumer claims were able to bypass arbitration prior to the change. Amazon is currently being sued after allegations that some Alexa devices recorded audio recordings of minors.
The judges decided that the case should not be dealt with by arbitration, because the minors did not agree to the terms of service. The Amazon changeover opens the doors to other lawsuits in court as well. It helps the company avoid costly class arbitrations in the future.