Amazon sent an email to customers on Friday with a cheerful subject line about updated terms and conditions. Buried in the legalese: you can no longer sue them as part of a class action.

The new terms force customers into binding arbitration for disputes and include an explicit class action waiver. Amazon pitched this as offering a “fast and efficient” resolution process. What they didn’t say: it also prevents customers from taking disputes before a judge or jury in most cases.

Customers can still file in small claims court for disputes under their state’s dollar threshold, typically $5,000 to $10,000. But for anything bigger, or anything that affects millions of customers the same way, you’re stuck in private arbitration.

The pattern is spreading

Amazon isn’t breaking new ground here. They’re following a well-worn path carved out by other tech giants over the past decade.

The strategy works because of a 1925 statute called the Federal Arbitration Act, which courts have interpreted very broadly. Companies can require arbitration as a condition of using their service. You don’t like it? Don’t use Amazon. (Good luck with that.)

The Supreme Court blessed this approach in AT&T Mobility v. Concepcion back in 2011, ruling that companies can ban class actions even when the individual claims are too small to pursue alone. Justice Scalia’s majority opinion said the FAA’s purpose was to make arbitration agreements enforceable, even if that meant individual plaintiffs would have no realistic way to get relief for small-dollar harms.

Since then, forced arbitration clauses have become standard across tech. Your phone, your streaming services, your apps, your social media accounts. All covered by arbitration agreements. All blocking class actions.

Why companies love this

The math is simple. A $50 overcharge isn’t worth suing over individually. But ten million customers overcharged $50 each? That’s a half-billion-dollar class action.

Arbitration kills the economics of collective action. Each customer has to bring their own claim, hire their own lawyer, pay their own arbitration fees. For small amounts, nobody bothers. The company keeps the money.

Even when companies lose individual arbitration cases, there’s no precedent, no public record, and often a confidentiality agreement. The next customer starts from zero.

Class actions, by contrast, let one lawsuit represent thousands or millions of people. They create enormous financial exposure for companies and often lead to policy changes beyond just a settlement check. They’re also public, which means bad press.

Amazon has faced several class action suits in recent years over everything from Prime Video ads to price-fixing allegations. Those cases are still working through the courts under the old terms. But future claims? Much harder to bring.

The arbitration backfire (that didn’t last)

There’s a hilarious chapter in this history that’s worth remembering. Around 2019, thousands of Amazon workers and Uber drivers figured out they could flood companies with individual arbitration demands. Arbitration costs money. The company typically has to pay the arbitrator’s fees, which run several thousand dollars per case.

When 12,500 drivers filed individual claims against Uber, it created a logistical and financial nightmare. The company faced millions in arbitration fees alone.

Some legal scholars thought this might force companies to abandon forced arbitration. Instead, companies just rewrote their arbitration clauses to batch claims, limit fees, or add more procedural hurdles.

Amazon’s new terms likely include similar safeguards. The details matter, and we won’t know how these clauses hold up until someone challenges them in court (ironically, you can still sue over whether the arbitration clause itself is enforceable).

What happens next

Not much, in the short term. Customers who want to opt out typically have 30 days to send written notice, usually to some obscure mailing address in Delaware. Almost nobody does this.

For cases already filed as class actions, the old terms apply. But new claims after the effective date will face the arbitration requirement.

Longer term, this is a policy question that Congress or state legislatures would need to address. California tried to ban forced arbitration clauses in employment and consumer contracts in 2019, but a federal court struck down major parts of the law, finding they conflicted with the FAA.

The Biden administration has pushed back in narrow areas. The Consumer Financial Protection Bureau banned forced arbitration in certain financial services disputes. The FTC has proposed limits on non-compete agreements that include arbitration provisions. But there’s no broad movement to restrict consumer arbitration clauses.

So Amazon’s move is legal, effective, and increasingly standard. If you don’t like it, your options are limited: opt out in writing within 30 days, or stop using Amazon.

For most people, that’s not really a choice at all. And Amazon knows it.