Is Amazon Playing Fair? Questions Rise Over Its Pricing Algorithm

Have you ever wondered if that convenient 'Buy Now' button on Amazon is actually leading you to the best deal? Hold that thought, because a proposed class action lawsuit is suggesting otherwise. It's an intriguing scenario that could have many of us reconsidering our quick-click habits.

What's the deal with Amazon's 'Buy Box'?

Let's set the stage. You're online, browsing Amazon for a product, and you see it: the 'Buy Box'. It's positioned to grab your attention, seemingly offering the top pick for your shopping needs. But the Amazon Buy-Box lawsuit is challenging that notion, indicating that this coveted spot might be more beneficial for Amazon's pockets than for offering you the best price.

Jeffrey Taylor and Robert Selway, plaintiffs from California, are at the forefront of this legal battle. Their contention? They believe that Amazon's 'Buy Box' algorithm is biased. Rather than showcasing the most affordable choice, it often promotes products from sellers who pay additional fees to Amazon for services like storage and shipping. This setup could potentially lead to higher prices for us, the buyers.

According to Reuters, the legal complaint suggests that since 2016, Amazon may have been selectively elevating products in the 'Buy Box' that are not the most cost-effective for consumers. This practice could violate Washington's consumer protection laws against misleading commerce activities. It's a serious claim that casts doubt on the reliability of Amazon's product recommendations.

The plaintiffs assert, "Plaintiffs and class members have been harmed by Amazon's deception. Through willfully deceptive practices, Amazon tricks consumers into paying more for goods on its site by placing more expensive offers in the Buy Box when Amazon is the logistics provider."

It doesn't stop there. Taylor and Selway argue that Amazon deters customers from considering alternatives. To find other sellers, buyers are required to follow a less straightforward path, clicking through to a separate link and scrolling down a list—a tactic that may divert them from potentially better deals.

This legal action is more than a fight for fair pricing; it's a stand for clarity and the freedom to make informed purchases. The complaint underscores that Amazon's streamlined 'Buy Box' process might be intentionally designed to keep consumer knowledge limited while boosting Amazon's profits.

Taylor and Selway seek to speak for a class of possibly "hundreds of millions" of Amazon shoppers who have made purchases via the Buy Box since the beginning of 2016.

The bigger picture beyond the price tags

The issue extends beyond just a few extra pennies; it's about the cumulative impact on millions of transactions. With Amazon drawing in around 126 million mobile visits and over 42 million computer visits monthly, even slight overcharges can accumulate to a significant sum. The Amazon Buy-Box class action lawsuit brings to attention an instance where a toy construction set was sold for $55 through Amazon's fulfillment service, overshadowing a $51 offer for the identical toy from a different seller.

The inner workings of the 'Buy Box' algorithm are known to only a select few at Amazon, a point stressed by Taylor and Selway. They point out a troubling lack of clarity: "Third-party sellers have no idea how they are being scored by Amazon's secret formula, and consumers are even more in the dark."

This lack of transparency has tangible effects, the complaint suggests. "The result is that consumers routinely overpay for items that are available at lower prices from other sellers on Amazon — not because consumers don't care about price, or because they're making informed purchasing decisions, but because Amazon has chosen to display the offers for which it will earn the highest fees," it states.

This argument isn't just about potential overpayments; it's a call for openness and fairness in a marketplace that many consumers trust and rely on. The proposed Amazon Buy-Box class action lawsuit seeks to bring into the light practices that may be subtly and possibly unfairly driving up costs.

Amazon's ongoing 'Buy Box' disputes

Amazon has been down this road before. The 'Buy Box' feature—a focal point for shoppers—hasn't just caught the eyes of consumers; it's also drawn scrutiny from regulatory bodies like the Federal Trade Commission (FTC) in the U.S. and authorities across Europe. These consistent concerns are sparking worldwide conversations about the ethics of market conduct and the importance of corporate openness.

Back in September, the FTC, supported by the attorneys general from 17 states, initiated legal action against Amazon. The case challenges certain Amazon practices, which allegedly dissuade third-party sellers from offering their products at lower prices elsewhere. According to the FTC's findings, Amazon has penalized sellers for providing discounts on other platforms by demoting their products in search results and stripping them of their 'Buy Box' privilege.

Across the pond, Amazon's 'Buy Box' has also been under the microscope in the United Kingdom. Here, two customers have filed a legal claim, arguing that Amazon's methods for determining which products appear in the 'Buy Box' have led to considerable losses for its customers.

These repeated allegations and the legal challenges they have incited are pivotal in the ongoing dialogue about maintaining fair play in the marketplace and ensuring companies are transparent with consumers.

The real stakes for everyday shoppers

This class action lawsuit has real implications for anyone with an Amazon account. If there's truth to these claims, it means that the quick and easy 'Buy Now' might have been costing more than we realized.

The plaintiffs are represented by Steve W. Berman, Barbara Mahoney and Meredith S. Simons of Hagens Berman Sobol Shapiro LLP.

The proposed Amazon Buy-Box class action lawsuit is Jeffrey Taylor et al. v. Amazon.com Inc., Case No. 2:24-cv-00169, in the U.S. District Court for the Western District of Washington at Seattle.