After 75,000 individual Echo users were organized to file a mass arbitration claim, Amazon found it more cost-effective to drop their arbitration clause and instead be brought to court.
Amazon has recently changed its terms of service to allow its customers to bring lawsuits against the company instead of having to go through an arbitration process. According to The Wall Street Journal, the company made the change after over 75,000 Echo users were organized to file individual arbitration cases, which would have left Amazon on the hook for millions of dollars in fees.
Unlike lawsuits, arbitration cases are handled by a third party instead of a judge or jury. According to the American Arbitration Association's rules (which Amazon was bound by in its old terms of service), the company involved is responsible for hundreds, sometimes thousands of dollars in fees when a consumer brings a case against it — and those numbers add up quickly if a law firm is able to coordinate large numbers of consumers to bring complaints at once.
