Amazon drops mandatory arbitration clause

On Behalf of | Jun 30, 2021 | Business Law |

New York residents sign terms and conditions agreements on a daily basis on the Internet that are required by many online services, and very few if any ever read exactly what is included in the language. In the case of Amazon, buried within their agreement is a clause that states all disputes must be handled in an arbitration process at company expense. However, now it appears that Amazon will be stopping this practice after a flurry of complaints they have received regarding one of their products.

The Alexa controversy

The Alexa product that has taken the nation by storm is now causing significant problems, at least for Amazon. The company has recently been hit with over 75,000 legal claims regarding the device’s ability to record what owners are saying at random while at home. The plaintiffs are filing the business law claims based on the possibility that this could violate their “reasonable expectation of privacy” right that is associated with constitutional protections. The U.S. Constitution does not address privacy per se, but the U.S. Supreme Court has set the precedent at a “reasonable expectation” when at home.

The potential litigation flood

The purpose of the clause at question was always to stop customers from collaborating and filing a class action lawsuit when they all had similar problems. However, now the company is reversing its requirement because the administrative costs of going to arbitration were overwhelming due to the 75,000 complaints. This now means that Alexa owners who purchased their devices from Amazon can sue as opposed to going to arbitration, and thus retaining a business litigation attorney can be advisable.