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Chronicles

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Amazon ends use of arbitration for customer disputes, which critics said put consumers at a huge disadvantage; disputes can now be pursued in federal court

Michael Corkery / New York Times : Tweets: @ddayen , @gregbensinger , @seattletimes , @shatter242 , @tdlenk , @bettermarkets , and @shiraovide Tweets: David Dayen / @ddayen : The arbitration storm strikes again, as Amazon drops the clause for consumer purchases. Importantly, however, arbitration remains in place AFAICT for the millions of 3rd-party sellers the company partners with. https://www.nytimes.com/... @gregbensinger : Mandatory arbitration remains the chief means for cos to have lawsuits go away quietly & not have to change the underlying behavior/problem. It's not really about the customer. Then Amazon was hit with 75,000 arbitration claims and flipped: @mcorkery5 https://www.nytimes.com/... @seattletimes : Amazon changed its approach to disputes after lawyers for consumers hit the company with roughly 75,000 arbitration claims alleging that devices featuring the voice-operated assistant Alexa were recording customers without their consent. https://www.seattletimes.com/ ... @shatter242 : @Techmeme @mcorkery5 After the recent walmart lawsuit they now know that the most they can be liable for is $300,000. That's nothing to them. They made that and more while I was typing this tweet. Travis Lenkner / @tdlenk : “Arbitration was always part of an effort to evade liability, not just to escape class actions,” said Travis Lenkner, a lawyer at the firm Keller Lenkner. Amazon “is the first company to turn tail. Others may well do so.” https://www.nytimes.com/... @bettermarkets : A first step in the right direction is a hopeful step. Like @amazon decision to end forced arbitration of customer disputes. But eliminating the jury trial waiver and not forcing plaintiffs to travel to Washington state to seek justice are key next steps. https://bettermarkets.com/... Shira Ovide / @shiraovide : Companies wanted unhappy customers to go to arbitration instead of suing. Arbitration isn't worth the hassle. Companies evaded liability. Lawyers figured out how to mass-produce arbitration claims. Companies say, OK FINE. SUE US. By @mcorkery5 https://t.co/PYusMfrwb1

New York Times Michael Corkery

Context & Ripple Effects

This lands weeks after Amazon quietly rewrote its terms of service to allow customer lawsuits, a reversal driven by more than 75,000 arbitration demands from Echo users that turned the company's own preferred dispute channel into a cost problem. The mechanism behind that flood was pioneered by firms like Keller Lenkner and FairShake, which file mass arbitration campaigns that force companies to pay per-case fees at scale.

Forced arbitration had long functioned as the tech industry's quiet-exit valve — [[a:948295|documents shared with Congress showed very few customers, employees, or contractors ever challenged the giants in arbitration]] — and Google had already retreated from it on the employment side in dropping mandatory arbitration for its workers. Amazon now becomes the highest-profile case of consumer-side arbitration collapsing under volume pricing.

First-order effects

  • Consumers buying from Amazon directly can now pursue disputes in federal court instead of individual arbitration, removing what critics called a structural disadvantage built into the purchase terms.
  • Arbitration requirements stay in place for the millions of third-party sellers on Amazon's marketplace, leaving a two-tier dispute system: buyers get courts, platform partners keep the quieter channel.

Second-order effects

  • Mass-arbitration firms like Keller Lenkner lose their most effective lever against Amazon specifically — their model depends on forcing companies to eat thousands of filing fees — which pushes them toward remaining targets like DoorDash and toward the seller side Amazon left untouched.
  • Every large consumer platform with a similar clause now faces the same playbook being pointed at it, creating pressure either to drop consumer arbitration preemptively or absorb per-case fees that scale with any product defect controversy.

Third-order effects

  • If mass arbitration keeps converting corporate cost-control tools into liabilities, forced arbitration's core economic appeal — disputes resolved quietly and cheaply, one at a time — erodes wherever claimants can coordinate, likely drawing renewed regulatory and congressional scrutiny of the practice.
  • The seller/customer split suggests platform companies will preserve arbitration precisely where claimants cannot easily aggregate, hardening a structural divide between consumer rights and business-partner obligations across marketplaces.

The trend: Mass-filed arbitration demands are flipping forced arbitration from a corporate shield into a cost exposure, pushing major platforms to restore court access for consumers while keeping the clauses where aggregation is harder.

Discussion

  • @ddayen David Dayen on x
    The arbitration storm strikes again, as Amazon drops the clause for consumer purchases. Importantly, however, arbitration remains in place AFAICT for the millions of 3rd-party sellers the company partners with. https://www.nytimes.com/...
  • @gregbensinger @gregbensinger on x
    Mandatory arbitration remains the chief means for cos to have lawsuits go away quietly & not have to change the underlying behavior/problem. It's not really about the customer. Then Amazon was hit with 75,000 arbitration claims and flipped: @mcorkery5 https://www.nytimes.com/...
  • @seattletimes @seattletimes on x
    Amazon changed its approach to disputes after lawyers for consumers hit the company with roughly 75,000 arbitration claims alleging that devices featuring the voice-operated assistant Alexa were recording customers without their consent. https://www.seattletimes.com/ ...
  • @shatter242 @shatter242 on x
    @Techmeme @mcorkery5 After the recent walmart lawsuit they now know that the most they can be liable for is $300,000. That's nothing to them. They made that and more while I was typing this tweet.
  • @tdlenk Travis Lenkner on x
    “Arbitration was always part of an effort to evade liability, not just to escape class actions,” said Travis Lenkner, a lawyer at the firm Keller Lenkner. Amazon “is the first company to turn tail. Others may well do so.” https://www.nytimes.com/...
  • @bettermarkets @bettermarkets on x
    A first step in the right direction is a hopeful step. Like @amazon decision to end forced arbitration of customer disputes. But eliminating the jury trial waiver and not forcing plaintiffs to travel to Washington state to seek justice are key next steps. https://bettermarkets.co…
  • @shiraovide Shira Ovide on x
    Companies wanted unhappy customers to go to arbitration instead of suing. Arbitration isn't worth the hassle. Companies evaded liability. Lawyers figured out how to mass-produce arbitration claims. Companies say, OK FINE. SUE US. By @mcorkery5 https://t.co/PYusMfrwb1