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Amazon moves away from arbitration in customer disputes

Amazon moves away from arbitration in customer disputes

by | Aug 4, 2021 | Business Litigation |

As one of the globe’s preeminent corporations, Amazon’s dispute resolution strategies attract extensive scrutiny. One of the company’s recent decisions regarding customer disputes has raised both praise and criticism from voices across many industries. Recently, Amazon announced that it would no longer use arbitration to resolve customer disputes.

A new dispute resolution strategy

It was a subtle way to announce a major shift in policy: On July 22, Amazon uses received a five-sentence email in their inboxes detailing the end of mandatory arbitration clauses in its conditions of use. Instead, consumers must bring complaints against the company through the federal court system.

Representatives for Amazon did not elaborate on the decision. However, the motivation is not particularly obscure. More than 75,000 customers have filed arbitration claims alleging that the corporation’s Echo device had recorded them without their consent. In addition, labor advocates have become increasingly vocal in their criticism of Amazon’s handling of consumer complaints and its alleged employment law violations.

What is the future of mandatory arbitration?

Arbitration has been a hot-button topic since fall of 2017 when the #MeToo movement brought to light the mandatory arbitration clauses that some employers may have used to prevent sexual harassment complaints from going public. In early 2018, the National Association of Attorneys General wrote to Congress requesting a ban on mandatory arbitration clauses regarding sexual harassment claims.

Those who oppose mandatory arbitration point to its secretive nature as a disadvantage to consumers and other claimants. Amazon’s shift to the use of litigation rather than arbitration could be an effort to provide greater transparency for its customers and shareholders alike.  Granted, consumer complaints and employment law claims are vastly different in countless ways. The trend, however, is clear: Dispute resolution through pre-trial negotiation and litigation rather than mandatory arbitration.