Plaintiffs Want Amazon to Stop Using 'Biased Algorithm' to Choose Featured Sellers

Amazon uses a “deceptive scheme to keep its profits -- and consumer prices -- high,” alleged a class action Thursday (docket 2:24-cv-00169) in U.S. District Court for Western Washington in Seattle.

Amazon uses a “biased algorithm to determine which offers shoppers will see” and “which sellers they will buy from” when searching for products on Amazon, the complaint said. When more than one seller on Amazon’s marketplaces offers the same item for sale, an Amazon algorithm selects one seller’s offer to appear in the “buy” box on a product page. The buy box has “buy now” and “add to cart” buttons consumers use to add items to their cart. About 98% of the time, shoppers go with the offer Amazon chooses for the buy box, it said.

Though customers can choose a different offer from the buy box selection, they “rarely do,” partly because of the one-click convenience of purchase, “but also because Amazon doesn’t make other options very conspicuous,” the complaint said. To select a different offer, shoppers have to locate “inconspicuous text" that says "Other Sellers on Amazon" or "See All Buying Options," and then pick from a list, it said.

Consumers “reasonably believe” that the buy box price is the best available for a given item, “but they are often wrong,” the complaint said. The buy box algorithm “is biased in favor of Amazon first-party retail offers or offers from third-party sellers who participate in the Fulfillment By Amazon (FBA) logistics service “for which it charges third-party sellers hefty fees to store their inventory, pack their products, ship orders, handle returns, and communicate with customers,” the complaint said.

The buy box algorithm “deceptively favors Amazon’s own profits over consumer well-being and will often select an Amazon first-party retail or FBA offer over an offer from a non-FBA seller, even when the non-FBA offer for the same product and delivery time is cheaper,” the complaint said. As a result, consumers “routinely overpay” for items that are available for lower prices elsewhere on Amazon “because Amazon has chosen to display the offers for which it will earn the highest fees,” it said.

U.S. and European antitrust authorities have launched multiple probes into Amazon’s anticompetitive conduct in relation to the buy box, and the Italian Competition Authority imposed a $1.1 billion fine on Amazon in 2021 for “abusing its dominant position” in the market, said the complaint. Regulators found that Amazon’s buy box algorithm “favored FBA sellers” since at least 2016, it said.

In a December 2022 settlement with the European Commission, Amazon agreed to take action to address concerns about buy-box “bias” and “data-misuse investigation,” the complaint said. The settlement requires Amazon to apply “equal treatment to all sellers” when deciding what to feature in the buy box, it said. As part of the agreement, Amazon will show a second, competing offer if the difference in price or delivery terms is substantial, it said.

Plaintiffs Jeffrey Taylor of San Clemente, California, and Robert Selway of Corona Del Mar, California, have made “many purchases,” via the buy box, said the complaint. Both plaintiffs have suffered harm due to Amazon’s “unfair and deceptive” buy box algorithm, it said.

Plaintiffs claim Amazon’s use of a “biased algorithm" to “confuse or deceive” consumers violates the Washington Consumer Protection Act. They seek an order enjoining Amazon from using a biased algorithm of selecting the buy box winner and ordering the e-commerce company to revise its selection process as it has in Europe, the complaint said. They seek actual damages to be determined at trial, treble damages under the Washington statute and pre- and post-judgment interest.