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Does Amazon’s Arbitration Clause Bar its Own Suit Against 1114 Anonymous Reviewers?

5034263269_b99543e558_bLate last week Amazon filed a lawsuit against a thousand plus members of the Fiverr marketplace who were selling fake Amazon reviews. The theory behind the case is that all of the reviewers are also Amazon customers, and are thus barred by Amazon ToS from taking money for the reviews. So Amazon has filed a suit against 1,114 John Does, and plans to subpoena Fiverr to identify them.

The facts of the case are easy to understand, but there could be a problem with the premise. On Tuesday Paul Levy of the Consumer Law and Public Policy blog has noticed that:

… there is a mandatory arbitration  clause in Amazon’s Terms of Service, requiring arbitration of "Any dispute or claim relating in any way to your use of any Amazon Service, or to any products or services sold or distributed by Amazon or through"  The clause is unconditional and two-way — it does not purport to bind only Amazon’s users.  And what Internet Service Provider will honor a letter from an arbitrator asking it to provide documents or information identifying its users?

So is this a problem, do you think?

In a word, no.

While Levy is right about the arbitration clause, he neglected to consider the standard escape clause found in most ToS. This is the clause that lets one party essentially rewrite the contract at will, and in the case of Amazon it reads:

We reserve the right to make changes to our site, policies, Service Terms, and these Conditions of Use at any time. If any of these conditions shall be deemed invalid, void, or for any reason unenforceable, that condition shall be deemed severable and shall not affect the validity and enforceability of any remaining condition.

Since Amazon can’t identify the review sellers, it can’t take them into arbitration. And since that clause is unenforceable, Amazon is pursuing legal remedies.

image by mccun934

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David Smith October 23, 2015 um 10:03 am

Change at any time, yes. But I have my doubts that Amazon can change its terms RETROACTIVELY to apply to prior posts, now, can it?

Nate Hoffelder October 23, 2015 um 10:07 am

Good point. I really don’t know if they can.

Michael October 23, 2015 um 4:59 pm

That objection may be why they ensured the lawsuit isn’t based solely on breach of contract.

"In this action, Amazon brings claims for breach of contract, other violations of Washington common law, and violation of the Washington Consumer Protection Act (RCW Ch. 19.86)."

I suppose a court will have to decide whether those other justifications supersede an arbitration agreement.

Nate Hoffelder October 23, 2015 um 5:11 pm

That could do it, Michael. Thanks.

But do you know what I just realized? I don’t think it matters.

If an Amazon user wanted to get that clause enforced, they would have to hire a lawyer and fight Amazon in court. The review sellers aren’t going to do that; they’re running for cover.

And even Amazon isn’t going to pursue the case beyond getting the names; their only interest is in wiping the review seller from their system, not pursuing legal remedies.

So the point about arbitration is effectively moot, I say.

RK October 23, 2015 um 8:01 pm

Very interesting article, thanks for posting.

Thomas Kearney October 24, 2015 um 11:12 pm

I don’t think Levy missed anything, since it seems unlikely to me that a court would interpret "unenforceable" to mean "unenforceable in practice"; rather, the more natural meaning would be "unenforceable for legal reasons." That doesn’t seem to be the case here. Also, when Amazon’s escape clause says it can "make changes" to the policy," I don’t believe that means Amazon can "decide to reinterpret the policy any way it wants at any time." It just means Amazon can change what the policy says. Unless it changes the language, the policy stays the same. But even if Amazon did rewrite the policy now, the new terms wouldn’t be the terms the users had agreed to, so the changes wouldn’t be binding on them.

You may be correct that Amazon isn’t interested in proceeding past identifying the reviewers. But a service provider interested in resisting a subpoena from Amazon for the identities of its users might very well make the argument that the user agreement requires this dispute be arbitrated, not litigated. I’m not saying this would succeed, but it’d be interesting to watch.

The Federal Arbitration Act says that a court, "upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." Since there’s no identifiable party on the other side to make such an application, you are probably correct that this won’t happen. On the other hand, I haven’t seen anything saying the court can’t do the same thing on its own accord, without a request from a party.

Nate Hoffelder October 25, 2015 um 10:18 am

"On the other hand, I haven’t seen anything saying the court can’t do the same thing on its own accord, without a request from a party"

And it’s not just the court. Fiverr could also make the argument about the ToS and the arbitration clause on behalf of unnamed users – and they might even win.

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