Amazon Faces Class-Action Lawsuit Over Manipulation of “Buy Box” Feature
Amazon is facing a class-action lawsuit filed by two California customers, accusing the e-commerce giant of deliberately misleading consumers and driving them to purchase items at higher prices through its “Buy Box” feature. The lawsuit alleges that Amazon’s platform has been designed to favor its own products or items from sellers participating in the Fulfillment By Amazon (FBA) program, leading customers to overpay for items that could be bought at lower prices from other sellers on the platform.
The “Buy Box” is a prominent feature on Amazon’s product detail pages, presenting customers with a “Buy Now” or “Add to Cart” prompt. The lawsuit states that nearly 98 percent of Amazon’s sales come from products featured in the Buy Box, leading consumers to believe they are getting the best deals. However, the complaint asserts that the algorithm behind the feature systematically guides customers towards purchasing higher-priced items, despite the existence of similar or quicker delivery options at lower prices.
Investigations by authorities in the United States and the European Union have revealed evidence suggesting Amazon’s preference for FBA sellers since at least 2016. In 2021, the Italian Competition Authority imposed a fine of over $1 billion on Amazon for engaging in these discriminatory practices. Additionally, the European Commission mandated that Amazon must ensure impartiality in its Buy Box feature selections.
This lawsuit marks a significant departure from previous legal actions against Amazon, as it seeks compensation for consumer detriment rather than focusing on antitrust issues or the impact on sellers. Filed on behalf of all persons who have made purchases via the Buy Box from 2016 to the present, the lawsuit argues that every member of the class action has likely been adversely affected by Amazon’s promotion of higher-priced items. The potential financial consequences for Amazon are yet to be determined but are expected to be substantial.
With a customer base of 300 million, 80 percent of whom are US subscribers, the lawsuit suggests that a large portion of Amazon’s consumers have consistently overpaid for their purchases over the past seven years. Given that Amazon reported US sales of over $574 billion last year, the implications of this lawsuit could be far-reaching.
The Buy Box is a critical element on Amazon’s marketplace, influencing buying decisions and seller success. When multiple sellers offer the same product, the Buy Box awards one seller prime placement and a “Buy Now” button, making it the default choice for shoppers. Its significance lies in Amazon’s endorsement of a seller’s offer as the best option for customers based on price, availability, and fulfillment.
Analyst comment
This news is negative for Amazon. The class-action lawsuit alleges that Amazon manipulated its “Buy Box” feature, leading customers to overpay for products. The financial consequences for Amazon are expected to be substantial. As a result, the market may react negatively, with a potential decrease in Amazon’s stock value and reputation.
