PHOENIX — Arizona is suing Amazon!
Attorney General Kris Mayes announced the lawsuit Wednesday claiming the online giant used unfair and deceptive business practices under the Arizona Consumer Fraud Act and the Arizona Uniform State Antitrust Act.
"Amazon's anti-competitive and monopolistic practices have artificially inflated prices for Arizona consumers and harmed smaller third-party retailers that rely on its platform," said Attorney General Mayes. "Amazon must be held accountable for these violations of our state laws. No matter how big and powerful, all businesses must play by the same rules and follow the same laws as everyone else."
One part of the lawsuit highlights the Amazon Prime cancellation process. It claims the process is intentionally confusing and misleading, a strategy Amazon calls Project Iliad. The process allegedly required users to navigate a complicated and manipulative interface with skewed wording, confusing choices, and repeated nudging.
This process was allegedly used to dissuade users from leaving the service. According to the AG's Office, internal documents showed Project Iliad succeeded in reducing Prime cancellations by 14%.
A second part of the lawsuit targets Amazon's Buy Box algorithm. The method is meant to determine which offer for a given product is made available via the "Buy Now" or "Add to Cart" buttons.
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The lawsuit claims the Buy Box algorithm is actually biased toward offers that maximize Amazon's profits, often favoring its own products or those of its sellers over other products not fulfilled by Amazon.
Additionally, the lawsuit accuses Amazon of unfairly maintaining its market dominance by enforcing unlawful price parity agreements through its Business Service Agreement. The agreements allegedly prevent third-party sellers from offering lower prices outside of Amazon, hindering competition against Amazon as a retailer and marketplace provider - ultimately inflating prices for Arizona consumers.
"Arizona consumers deserve to be treated fairly and without deception by big corporations like Amazon, and small businesses deserve a level playing field," said Attorney General Mayes. "Amazon should change its business practices to comply with Arizona law."
In response to the lawsuit, an Amazon spokesperson provided the following statement:
“We are surprised and disappointed by these cases, which the Arizona Attorney General initiated without reviewing a single document from Amazon, resulting in a fundamental misunderstanding and mischaracterization of how Amazon’s businesses work.
“Prime’s sign-up and cancellation processes are clear and simple by design, meeting a high bar for customer satisfaction well above legal requirements. Customers sign up for Prime because it’s an incredible service and a great value, and they can cancel their Prime membership with a few clicks from the home page.
“These suits would force Amazon to engage in practices that actually harm consumers and the many businesses that sell in our store—such as having to feature higher prices.”
