Good question. The legal departments of many companies will be closely monitoring what is happening to Amazon. While consumer advocates have become smarter and more aggressive in challenging companies` binding arbitration clauses against them, some companies like Amazon prefer to try their luck in court. The idea is that most people don`t want to hire a lawyer to resolve a small claim. And that most disputes won`t escalate into a costly class action lawsuit. Simply put, the cost of arbitration is more profitable for businesses and generally more predictable than preparing for court. In addition, it is often private and mysterious, which surprises the public buying problems. Finally, language can prevent class actions. Gone is the language that requires each lawsuit to be filed individually in arbitration, which not only kept disputes in court, but made it impossible for clients to participate in class actions. Now, all U.S. customers can make claims in court, but the courts must be located in the county that includes Amazon`s headquarters in Seattle.

Washington state laws apply to Amazon`s relationships with all U.S. customers under the new policy. Keller Lenkner used a similar approach to question how DoorDash, the food delivery service, ranked and paid its employees. When the company filed thousands of arbitration lawsuits on behalf of DoorDash workers, the company argued unsuccessfully in court that it should not pay much of the upfront costs for business. A federal judge reprimanded DoorDash for what he called an attempt to circumvent the arbitration system. Amazon did not immediately respond to a request for comment. The retail giant has been criticized in the past for forcing consumers, as well as workers and third-party suppliers on its platform, to resort to arbitration to resolve disputes. Companies have spent more than a decade forcing employees and customers to settle disputes outside of the traditional court system by using secret arbitrations that typically don`t allow plaintiffs to regroup and receive large cash payments that resemble a class action lawsuit.

Two main reasons: cost and ease. The use of binding arbitration dates back more than 100 years, but for practical purposes, modern use really began in the 1980s and 1990s, when the U.S. Supreme Court expanded the Federal Arbitration Act. This series of decisions has given large corporations considerable power to force disputes between employees and customers into arbitration and away from the cost and unpredictability of state and federal courts. For example, if a person buys a cell phone, the fine print that comes with that phone will most likely include a section that prevents lawsuits by forcing the customer to use a neutral arbitrator to resolve disputes. Buying a phone from this company means that the customer has also accepted this offer. Many people are not aware of this until they come into conflict with this company. Amazon`s terms of service page states that it was last updated on May 3, 2021. According to the WayBack Machine, according to May 1, the “Disputes” subsection explained in detail the process that users would have to follow if they wanted to make a claim against the company. He also clarified Amazon`s responsibility to reimburse review fees for claims under $10,000, unless the claim is declared questionable. Now, the “Disputes” section reads: Although Amazon has dismissed claims, resolving so many disputes can become more expensive than lawsuits. And in this case, the thousands of claims were no coincidence.

In recent years, consumer law firms have filed thousands of similar claims to overturn arbitration against the companies that ordered it. Uber has endured such efforts, the Wall Street Journal noted. The same goes for Intuit, the manufacturer of TurboTax. This means that the companies that ordered the arbitration will now have to pay in bulk. In many disputes, it would not make financial sense for consumers to take the trouble to hire a lawyer and pursue an arbitration claim as an individual. For decades, consumers in similar litigation have been able to pool their resources to hire a lawyer to represent them as a class in class actions. The retail giant tacitly removes the obligation to settle all disputes privately from its terms of use. It is not the same as mediation; a neutral arbitrator has the judicial power to make an enforceable decision. The process is like a trial with statements and evidence, but more streamlined.

And the rules of evidence are not necessarily as strict as a state court might require. More complex cases of workers claiming to be harassed in the workplace or faced with other professional tasks are unlikely to be eliminated in mass arbitration. Because the Supreme Court should not weaken companies` right to arbitration, Gupta said Congress must pass legislation to protect workers` and consumers` rights to go to court. In a brief email to customers, Amazon said anyone using its products should now pursue disputes with the company in federal court instead of going through the private and secret arbitration process that critics say puts consumers at a serious disadvantage. Amazon has quietly changed its terms of service to allow customers to sue after receiving a flood of arbitration requests, according to the Wall Street Journal. The company`s dispute resolution policies for customers previously required them to file their complaints in a secret court. These so-called arbitrations are typically used by companies to prevent potentially harmful decisions in court. Amazon faces three proposed class action lawsuits that could result in large payments to several plaintiffs, including one filed in May accusing it of registering Echo users without authorization. While the mass arbitration strategy has worked in some types of cases, it probably can`t be “widely replicated across the economy,” said Deepak Gupta, an attorney who used clients in a landmark 2010 Supreme Court case, AT&T Mobility v.

Concepcion, which enshrines arbitration as how companies can try to resolve disputes. In May, Amazon`s lawyers reportedly informed the plaintiffs` lawyers of the change to their terms of service. The Company`s initial dispute resolution clause states that “the arbitration will be conducted by the American Arbitration Association (AAA) in accordance with its rules, including the AAA`s additional procedures for consumer disputes. The Terms of Service on Amazon`s website, updated on May 3, now state: “Any dispute or claim related in any way to your use of an Amazon Service will be resolved in the state or federal courts located in King County, Washington, and you consent to the exclusive jurisdiction and venue of such courts. We waive any right to a jury trial. “It was never about making it easier for customers to resolve disputes — it was about killing claims,” Gupta said. “When Amazon saw that it was facing an avalanche of claims, it decided to leave.” As a legal vaccine against lawsuits, hidden arbitration clauses have become an industry standard in products ranging from downloaded music to iPhones to concert tickets. Employment too. But Amazon decided to suddenly resign and simply let dissatisfied customers sue them.

Outside of the court system, binding arbitration is perhaps the most popular dispute resolution mechanism in U.S. history. The American Bar Association generally defines it as “a private process in which the parties to the dispute agree that one or more persons can make a decision on the dispute after receiving evidence and hearing arguments.” When Amazon recently said it was abandoning binding arbitration as a method of resolving disputes with customers — thus informing millions of people of an arbitration clause they didn`t even know they had agreed to — much of the tech industry took note. “Amazon and you each agree that a dispute resolution process will only be conducted on an individual basis and not as part of a collective, consolidated, or representative lawsuit.” The amendment replaced a 350-word description of their request for arbitration with two sentences that state that disputes can be brought in state or federal courts in King County, Washington. We`ve seen mass arbitrations in the past to pressure tech companies (often with the aim of getting the above arbitration clauses removed from their employment contracts). Uber and DoorDash have both faced thousands of conflicts from their workers. Since consumers and employees seem to rule out the possibility of using arbitration clauses to their advantage, it actually seems that changing Amazon`s terms of service could be done more out of self-interest: winning or losing, a class action lawsuit is very likely to be less costly for the company. .