Amazon has managed to get itself into trouble. The online retail giant is being accused of misleading customers by using a “biased algorithm” to hide cheaper deals with fast delivery times when they go to purchase an item, according to a new report. class action lawsuit. The lawsuit alleges that Amazon does this in an effort to “reward” sellers for paying “high fees” to the company.
“Amazon employs a deceptive scheme to keep its profits (and consumer prices) high,” the lawsuit reads. “It uses a biased algorithm to determine what deals shoppers will see, and therefore which sellers they will buy from, when they search for items on Amazon.”
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The lawsuit, which was filed on February 8 by two customers, claims that when multiple sellers offer the same item for sale, the algorithm chooses one offer to appear in the “Buy Box,” which contains “Buy Now” buttons. ” and “Add”. “To Cart”, on the product page. Customers can also choose a different deal that doesn't appear in the “Buy Box,” but the lawsuit alleges that Amazon “doesn't make other options very eye-catching.”
It also alleges that the algorithm is “biased” and favors Amazon's “own retail offers or offers from third-party sellers participating in FBA.” Fulfillment by Amazon, also known as Fulfillment by Amazon, is a service by Amazon in which it charges third-party sellers “high fees” for storing its inventory, packaging products, talking to customers, shipping orders, and arranging for returns.
The lawsuit claims that the algorithm will choose “a first-party or FBA retail offer over an offer from a non-FBA seller, even when the non-FBA seller offer for the same product and time delivery is cheaper”, putting profits before people.
“The result is that consumers routinely pay more for items that are available at lower prices from other sellers on Amazon, not because consumers don't care about price or because they are making informed purchasing decisions, but because Amazon has chosen for showing the product. offers for which you will earn the highest rates,” the lawsuit reads.
The two clients request precautionary and monetary measures for the lawsuit, and also want Amazon's use of the Buy Box algorithm to be prohibited and its selection process for the offers that appear in it to be reviewed.
Amazon makes a significant portion of its money from FBA fees. According to data firm Marketplace Pulse, Amazon pockets 20% to 35% FBA fees. The firm also found that Amazon takes 50% of sellers' revenue, including FBA, advertising and referral fees, a percentage that has increased over the years.
In Amazon's fourth quarter Profits By 2023, the company earned more than $43 billion from the services of third-party sellers, an increase of 19% from the same period last year.
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