Arizona Attorney General Kris Mayes announced Wednesday that the state is suing Amazon.
She blames Arizona price inflation patterns on the company’s monopoly-like operations.
“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,” Mayes said in the press release.
There are two lawsuits filed.
The first tackles a project Amazon called “Project Iliad” a way to reduce the number of Amazon Prime account cancellations.
Mayes’ office alleges the company used manipulation, skewed wording and pressure to accept other deals in an effort to deter customers from opting out of Prime.
KGUN reached out to Amazon for comment. Company spokesperson Tim Doyle said that’s simply not the case.
Primes sign-up and cancellation processes are clear and simple by design, meeting a high bar for customer satisfaction well above legal requirements,” Doyle said in a statement to KGUN.
“Customers sign up for Prime because its an incredible service and a great value, and they can cancel their Prime membership with a few clicks from the home page.
The basis for the second lawsuit is the “Buy Box” algorithm.
If you’ve ever used the e-commerce service, you’ll recognize its main identifiers: the “Buy Now” and “Add to Cart” buttons.
Mayes said this misleads customers to think they’re buying something that the majority of other buyers prefer, when in actuality, they’re buying products that boost Amazon’s profitability the most.
The second lawsuit also states that before 2019, the company required it’s small or independent sellers to sign a Business Services Agreement (BSA), part of which prohibited them from selling products at lower prices than Amazon.
In the U.S., there are nearly 1 million independent sellers, including small to mid-size businesses, that operate through Amazon.
According to lawsuit documents, this practice, although removed from the BSA after opposition, is still happening, just through other loopholes like its “Brand Standards,” “Fair Pricing” policy, and “Seller Code of Conduct.”
Both lawsuits violate the Arizona Consumer Fraud Act and the Arizona Uniform State Antitrust Act, according to the AG office.
“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 Amazons businesses work,” continued Doyle.
“These suits would force Amazon to engage in practices that actually harm consumers and the many businesses that sell in our storesuch as having to feature higher prices.”
But Mayes maintains that Amazon needs to make changes in its business operations.
“Arizona consumers deserve to be treated fairly and without deception by big corporations like Amazon, and small businesses deserve a level playing field,” Mayes said.
“No matter how big and powerful, all businesses must play by the same rules and follow the same laws as everyone else.”