Amazon (AMZN) might face a new class action lawsuit over its Alexa devices. A federal judge in Seattle has ruled that tens of millions of Alexa users can move forward with a nationwide class action lawsuit, accusing the tech giant of recording private conversations without permission.
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On Monday, U.S. District Judge Robert Lasnik ruled that the plaintiffs meet the legal criteria to sue as a group. He noted that the scale of the alleged harm, impacting millions, makes class action the most efficient way to handle the case.
A Brief Background
Initially filed in 2021, the lawsuit accuses AMZN of violating Washington state’s consumer protection law by failing to disclose that it retained and utilized Alexa recordings for commercial purposes.
Plaintiffs argue that Alexa devices were designed to “illegally and surreptitiously intercept billions of private conversations,” capturing audio beyond direct commands.
Apart from monetary damages, the class action seeks a court order to stop the alleged privacy violations, including the destruction of existing recordings and related data.
Amazon’s Take
Amazon has denied these allegations and claims that Alexa only activates after hearing a “wake word” like “Alexa.” The company also said there is no evidence of wrongful recordings. Further, it stated that the devices have built-in safeguards to prevent accidental recordings.
Importantly, this is not the first time AMZN has faced scrutiny over Alexa’s data practices. In 2023, the company paid $25 million to settle FTC charges related to children’s voice data retention.
However, given the vast number of Alexa users nationwide, this class action could expose Amazon to substantial legal and financial repercussions.
Is Amazon a Buy, Hold, or Sell?
Turning to Wall Street, AMZN stock has a Strong Buy consensus rating based on 45 Buys and one Hold assigned in the last three months. At $246.60, the average Amazon stock price target implies an 11.78% upside potential.
