Amazon Changes U.S. Customer Terms to Require Arbitration and Bar Class Actions

Amazon has changed the legal terms governing its U.S. customers, requiring most future disputes with the company to be resolved through individual binding arbitration and preventing customers from pursuing class actions. The revised Conditions of Use took effect August 14, with Amazon stating that customers accept the changes by continuing to use its services.

Customers may still bring qualifying cases in small claims court, while lawsuits filed before August 14, including existing class actions, are not covered by the new agreement. Amazon said arbitration offers customers a faster and less expensive way to resolve disputes.

Binding arbitration moves a dispute outside the traditional court system. Rather than having a judge or jury decide the case, the parties present their claims to an arbitrator, whose decision is generally binding. Federal law generally requires courts to enforce valid arbitration agreements like other contracts.

Whether Amazon's new provision applies to a customer also depends on ordinary contract law. With online agreements, courts can examine whether customers received reasonable notice of the terms and whether their actions showed acceptance. Amazon's revised Conditions of Use state that customers agree to the changes by continuing to use its services after August 14.

The revised terms also include a class action waiver. Class actions allow people with similar legal claims to pursue them together rather than filing separate cases, which can make relatively small claims more practical to bring. The U.S. Supreme Court has generally upheld valid arbitration agreements that bar consumers from joining together in class proceedings.

Amazon previously removed a similar arbitration requirement in 2021 after roughly 75,000 customers filed individual arbitration demands alleging that Alexa-enabled devices recorded them without consent. The company then changed its terms to allow disputes to be brought in state or federal court in Washington.

Mass arbitration allows lawyers to coordinate large numbers of separate arbitration demands involving similar allegations rather than bringing one class action. Each customer still pursues an individual claim, but many related demands can be filed during the same period.

Under the revised agreement, Amazon defines a mass arbitration as 25 or more demands filed within a six-month period involving the same or similar subject matter and common issues. Those claims are subject to a batching process rather than all moving forward at the same time.

As of August 15, Amazon's arbitration, class action waiver, and mass arbitration provisions are in effect as part of its Conditions of Use for U.S. customers.