Amazon's alternative to ADR

In a somewhat interesting move, with no prior announcement, Amazon has changed its terms of service and no longer requires customer disputes against it to be resolved through arbitration, but rather via the court process.

Whilst Amazon news has recently been centered around its founder and CEO Jeff Bezos being launched into space aboard the New Shepard, Amazon has quietly changed its requirement for arbitration for pursuing claims against it.

Many disputes have arisen from the company's Alexa-powered Echo devices, which, it is claimed, records the owners without their permission.

Law firms have used online marketing and other tools to sign up consumers en masse to file arbitration claims against Amazon. This had led to Amazon receiving some 75,000 individual arbitration demands. Amazon's arbitration clause and its own policy required it to pay the filing fees, which amounted to millions of dollars.

The process of arbitration was described by a lawyer for the claimants as an inaccessible structure that is not financially worthwhile, however, with the recent tactical deployment of the large amount of arbitration demands the lawyer said now they're seeing exactly what they bargained for, and they don't like it.

Interestingly, in 2019 when consumers filed a proposed class action in respect of the Alexia devices, Amazon successfully argued before the courts that the claims belonged in arbitration.

Following a complete flip-flop by Amazon with its dispute resolution clause, it is a timely reminder when drafting dispute resolution clauses to think about:

1. Where do you want disputes to be resolved;

2. Who is paying for the dispute resolution process; and

3. Why.

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