Arizona suing Amazon over Prime cancellation process, ‘Buy Box’ algorithm

May 15, 2024, 2:15 PM | Updated: May 17, 2024, 12:33 pm

PHOENIX — Arizona Attorney General Kris Mayes announced Wednesday the state is suing Amazon over its Prime cancellation process and “Buy Box” algorithm.

The first of two lawsuits alleges the online commerce giant has made the process of canceling its Prime membership service intentionally confusing and misleading. Consumers have canceled Prime subscriptions at a 14% lesser rate as a result of the strategy, according to the suit.

Arizona isn’t alone in the accusation. The Federal Trade Commission sued Amazon in June 2023 because the company “knowingly complicated the cancellation process for Prime subscribers who sough to end their membership.”

What else is Arizona suing Amazon over?

A second Arizona lawsuit dives into Amazon’s alleged misuse of its “Buy Box” algorithm.

The service is supposed to offers products that most consumers would want through the “Buy Now” or “Add to Cart” buttons, but the lawsuit says decisions are biased toward products that help Amazon’s bottom line. Products that are favored are Amazon’s own or those from Fulfillment by Amazon (FBA) sellers, according to the suit.

Sellers who use FBA are also required to pay Amazon fees for a variety of services, including to warehouse products, pack and label items for shipping, and delivery.

Again, Amazon has faced similar accusations in other legal action. A class-action lawsuit regarding the “Buy Box” algorithm’s alleged deceptive practices was filed in February.

The second Arizona lawsuit also alleges Amazon has been enforcing unlawful price parity agreements as part of its Business Services Agreement, preventing third-party sellers from offering lower prices elsewhere.

“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 a press release. “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.”

Amazon responds to Arizona lawsuits

The online commerce giant responded to the lawsuits on Wednesday, saying it disagreed with Mayes’ decisions.

“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,” Amazon spokesman Tim Doyle said in an email to KTAR News 92.3 FM. “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.”

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Arizona suing Amazon over Prime cancellation process, ‘Buy Box’ algorithm