Two customers have filed a class action legal suit accusing Amazon of pushing down lower-priced items with the help of an in-house algorithm.
The lawsuit, filed in a federal district court in Washington, points the finger at Jeffrey Bezos’ delivery empire promoting third-party sellers that charge customers more when checking out, where viable alternatives are hidden.
Jeffrey Taylor and Robert Selway’s case, reported via Ars Technica, centers on the supposedly misleading ‘Buy box’ algorithm, which is a part of the Fulfilment By Amazon (FBA) service.
Buy Box
The Amazon selling feature known as the “Buy Box” appears at the right-hand side of the Amazon product detail page and allows items to be quickly added to a user’s cart when browsing the digital storefront.
It was rebranded “Featured Offer” officially. Still, the company tried to notify businesses of the change, saying, “Learn the lingo: Buy Box is the former term for what is now the Featured Offer in the Amazon store. This automated component recommends products to aid the online shopping experience.”
The two customers accusing Amazon state that their case represents “all persons who made a purchase using the Buy Box from 2016 to the present.”
They argue that “when more than one seller on Amazon’s marketplace offers the same item for sale, an Amazon algorithm selects just one seller’s offer to appear in the “Buy Box” of a given product page.”
“Nearly 98% of the time, Amazon shoppers go with the offer Amazon chooses for the Buy Box,” said the complainants.
In the case made to the Washington district court, Selway and Taylor say consumers are trusting Amazon’s recommendations, believing they are the lowest priced. Still, they are, in fact, chosen “to display the offers for which it (the advertised item) will earn the highest fees.”
Fulfillment by Amazon
The FBA program is an automated service promoted by the sales platform. It is intended that businesses pay a premium to process advertised orders through ‘Supply Chain by Amazon.’
The paid-for-service has a range of features that businesses can take advantage of, including reduced shipping costs that are “30% less per unit than standard shipping options offered by major U.S. carriers and 70% less per unit than their premium options comparable to FBA.”
In September of last year, the Financial Trade Commission (FTC) brought a case to bear against the platform’s alleged attempts to remove fair and open competition.
The charges against Amazon focused heavily on the FBA, with the FTC stating these tactics included:
- Anti-discounting measures punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, suppose Amazon discovers that a seller is offering lower-priced goods elsewhere. In that case, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
- Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, making it substantially more expensive for sellers on Amazon to offer their products on other platforms. This unlawful coercion has, in turn, limited competitors’ ability to effectively compete against Amazon.
David Zapolsky, Senior Vice President of Global Public Policy & Amazon’s General Counsel, responded publicly, saying that the “FBA is a best-in-class, very competitively-priced service offered to businesses selling in our store at very competitive prices. Sellers can choose to use their own fulfillment options as they see fit, and many do, or they can use the option we’ve developed.”
It remains to be seen if Selway and Taylor will be the only complainants against the global online marketplace — but eyes will be on the result of the FTC’s ruling and any impact it has on fair and open competition in the digital shopping world.
Featured Image Credit: Photo by Christian Wiediger Rymh; Unsplash
