Alternative Dispute Resolution

Amazon drops arbitration requirement after facing over 75,000 demands

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Many companies require their employees and customers to resolve disputes through arbitration rather than in the courtroom. Now, Amazon is no longer one of them.

The Seattle-based multinational technology company recently updated its terms of service to allow people to bring individual or class action lawsuits against it.

According to the Wall Street Journal, Amazon made the change in response to more than 75,000 pending arbitration demands on behalf of Echo device users.

Lawyers involved also told the Wall Street Journal that Amazon would have paid out tens of millions of dollars in filing fees in those cases. It now faces several class actions, including one alleging that it improperly recorded and preserved conversations through its Echo Dot Kids devices.

The Verge and Ars Technica also have coverage.

Amazon’s conditions of use page, which was updated May 3, now states that “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.”

According to the Verge, the company’s previous terms of service included a requirement that customers agree to the Federal Arbitration Act to use any of its services.

In 2018, the U.S. Supreme Court held that employers may require their employees to take all employment-related disputes to arbitration on an individual basis. As a result, Ars Technica reports, arbitration agreements have become increasing popular. Telecommunications companies like AT&T and Verizon require arbitration in exchange for obtaining their services, while online home goods retailer Wayfair includes an arbitration clause with every purchase.

However, as Ars Technica also reports, Google ended arbitration requirements for employees in 2019. One factor in this trend reversal could be law firms that use digital marketing tools to recruit thousands of customers to participate in arbitration.

Law firm Keller Lenkner recruited more than 5,000 DoorDash drivers who claimed that they were improperly classified as contractors, and in February 2020, a federal judge ruled that the food delivery company was required to arbitrate each claim.

According to Ars Technica, DoorDash paid nearly $10 million in arbitration fees before the cases were decided. The company later settled claims brought by 35,000 drivers for $85 million.

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