The online retailer used an algorithm that reportedly steered customers to more expensive items
Online retail giant Amazon has been sued in a proposed US class action for allegedly violating consumer protection laws, Reuters reported on Friday.
According to the report citing a complaint filed in a federal court in Seattle, Amazon was illegally steering customers to more expensive products by using an algorithm which determines what to display in the retailer’s ‘Buy Box’ when buyers searched for products. The suit claims that the algorithm often picked higher-priced items to display to customers instead of cheaper ones.
The complaint also stated that buyers were likely to heed Amazon’s suggestions 98% of the time, trusting the retailer to offer the best deals. According to documents cited by the news outlet, however, the algorithm was created specifically to benefit the retail giant by suggesting sellers that are part of its ‘Fulfillment By Amazon’ program and pay the marketplace extra fees for its services.
“While ostensibly identifying the selection that consumers would make if they considered all the available offers, Amazon’s Buy Box algorithm deceptively favors Amazon’s own profits over consumer well-being,” the lawsuit stated. The practice allegedly violates a Washington state law against deceptive trade practices.
Amazon has so far declined to comment on the case, the latest in a slew of private and government actions regarding the retailer’s business practices. Two separate class actions that also focused on violations against consumers claimed that Amazon charged buyers for returned purchases and failed to meet delivery times.
In September last year, the US Federal Trade Commission (FTC) also filed an antitrust lawsuit against the company for allegedly abusing its market dominance by forcing sellers to use its warehouses and delivery services, thus inflating prices for products.
Amazon asked a federal judge to dismiss the case in December, arguing that its business practices are standard in the retail industry, and calling the lawsuit an “effort to hobble one of America’s most consumer-focused businesses.” Earlier this week, the FTC responded by asking for the lawsuit to continue.
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