Amazon is staring down a $1 billion class action lawsuit in the U.K., with the company accused of using a “secretive and self-favoring algorithm to ensure that the Buy Box nearly always features goods sold directly by Amazon itself, or by third-party retailers who pay hefty storage and delivery fees to Amazon.”
As reported by outlets like CNBC, Amazon’s practices have been described as harmful to its customers in specifically directing them to its “featured offer” deals, while deals of a better value are kept hidden. Additionally, the lawsuit claims Amazon exploits its aforementioned “Buy Box” (also known as “Buy Now” or “Add to Basket”) to direct consumers towards its own products, along with products from third-party sellers who utilize the company’s order fulfillment and delivery services.
Back in August, Amazon announced that it intends to raise the fees it charges to third-party sellers who use its Fulfillment by Amazon (FBA) services over the holidays for the first time in company history. With this, it’s certainly suspicious that Amazon would prefer consumers be directed either to its own products, or those where it makes money off third-party sellers through fulfillment fees.
It’s also interesting that Amazon gives sellers listing placement advantages should they become “Buy Box” eligible. As a result of Amazon’s practices, customers have ended up paying more for products than they may have otherwise, according to the lawsuit.
The class action suit is currently expected to be filed with the Competition Appeal Tribunal sometime later this month. The law firm heading the lawsuit is Hausfeld, with Hausfeld estimating total damage as a result of Amazon’s practices falling in the £900 million ($1 billion) range.
For more Amazon news, be sure to read through some of our previous coverage including Amazon raising its third-party seller fees over the holidays due to 'inflation', and Amazon acquiring Roomba maker iRobot for $1.7 billion.