Amazon has been named the defendant in a class–action lawsuit that insinuates it sweeps the lower-price offers of some third-party sellers under the rug, in turn causing consumers to purchase higher-priced items from its preferred sellers.
The new complaint, filed on Feb. 8 in Washington’s Western District Court, alleges that the jack of all goods has violated the state’s Consumer Protection Act by working to “nudge or trick [consumers] into purchasing higher-priced offers despite the availability of lower-priced offers for the same product with equal or better estimated delivery times.”
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The crux of the complaint focuses on Amazon’s Buy Box feature and the algorithm behind it. When a consumer searches for a product and opens the listing for that product, a box appears on their screen prompting them to “Add to Cart” or “Buy Now.” If multiple sellers have the same item up for sale, only one of those sellers “wins” the Buy Box, the lawsuit alleges, noting that other options to purchase the same product appear in a dropdown bar below the Buy Box which could be out of sight, out of mind for the average user.
The plaintiffs, Jeffrey Taylor and Robert Selway, both of California, claim that Amazon uses a “biased algorithm to determine which offers shoppers will see, and therefore which sellers they will buy from, when they search on Amazon.”
The complaint alleges the e-commerce giant’s algorithm favors the its first-party retail offers and third-party sellers who participate in the company’s program, Fulfillment by Amazon (FBA). FBA sellers ship their products to Amazon, which stores, processes and sends the items for a fee. Per the complaint, 84 percent of third-party sellers on the digital marketplace used the FBA program in 2020.
According to the plaintiffs, that poses a problem for consumers if other third-party sellers not affiliated with FBA offer lower prices on the same product.
“The result of the Buy Box algorithm’s biased factors is that offers routinely ‘win’ the Buy Box, even though they are more expensive than other offers in the marketplace for the same product, because the offer is from Amazon or the third-party sellers that participate in FBA—and pay Amazon the requisite FBA fees,” the complaint reads.
Per the lawsuit, “Amazon customers reasonably believe that the Buy Box…features the lowest-price offer for that item.”
The document further alleges that consumers make nearly 98 percent of Amazon purchases using the “Add to Cart” and “Buy Now” buttons. Due to that—and the fact that the class action covers “all persons who made a purchase using the Buy Box from 2016 to the present”— the complaint notes that the “plaintiffs believe that there are hundreds of millions of class members” that suffered financial injury because they overpaid for items they could have purchased for less.
Taylor and Selway aren’t the only ones coming after the juggernaut’s algorithms. The FTC filed an antitrust lawsuit against Amazon last year that focused in part on an algorithm called “Project Nessie,” which allegedly sought to deliver price hikes on items for which the technology predicts other stores would subsequently increase prices for, reportedly resulting in extra profit for the company. Other governments, like Italy and the UK, have also investigated the Buy Box practices, issuing mandatory course corrections to Amazon based on their findings.
“Our filing follows in the footsteps of several active consumer rights class actions against Amazon filed by our firm,” said Steve Berman, an attorney for the plaintiffs. “We look forward to holding Amazon to account for what we believe has been a great burden placed upon its customers who number in the hundreds of millions.”
Amazon did not return Sourcing Journal’s requests for comment on the lawsuit.
