Amazon Hit with 2 Lawsuits: Finally Testing Customers’ Patience?
In a world full of options, today’s customers still expect major brands like Amazon to provide protection to them, respect their needs and offer transparency when necessary.
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Amazon became what it is for a reason. When it comes to convenience, the ecommerce behemoth pretty much invented the model. Once referred to as the everything store, Amazon has become the largest online retailer not just by offering an immense amount of products, but by expediting delivery, streamlining the digital experience and leading with ‘customer obsession’ at its core.
Across industries, leaders often reiterate the ‘Amazon Effect’ - the idea that every interaction and experience, no matter the brand or category, is now compared to Amazon. The effect the organization has on ecommerce and the customer experience at large is almost unparalleled.
But, with great power comes great responsibility. With its ever increasing presence, the brand has become many customers’ primary platform for online shopping. And it is this ubiquitousness that, at times, keeps customers hooked even when the brand isn’t keeping to the same standards it once did.
However, in a world full of options, today’s customers still expect major brands like Amazon to respect their needs and offer transparency when necessary. Over the last week, it seems these values have been tested.
Across two separate class action lawsuits, Amazon customers have complained of unfair practices, deception and anticompetitive behavior. With both lawsuits filed in the same week, Amazon is now likely to be forced to address concerns and potentially pay, if ruled in its customers’ favor.
Amazon’s ‘Buy Box’ and Anti Competitive Concerns
When shopping on Amazon, customers are greeted by an abundance of options for every product they search. To simplify the decision process, the brand has implemented an algorithm to surface product recommendations and highlight top matches.
While many customers assume that these recommendations are based on factors like quality, price and delivery time, a pair of individuals is currently claiming otherwise. In a lawsuit filed last week, Amazon customers Jeffrey Taylor and Robert Selway allege that Amazon is tricking users into buying more expensive products with its ‘Buy Box’ feature.
The ‘Buy Box’ or ‘Featured Offer’ is a window that appears at the top right of a product detail page above the buy now button, according to Amazon. The retailer claims it “lifts products above the competition to help customers find what they need and compare alternatives based on factors like product price, condition, and shipping speed.”
According to the lawsuit, 98% of Amazon’s sales are of items within the ‘Buy Box’ categories - making it a major player in determining how customers shop on the platform.
Rather than focusing on price, speed and condition, Taylor and Selway are claiming that, “Amazon features items from its own retailers and sellers that participate in Fulfillment By Amazon (FBA), both of which pay Amazon higher fees and gain secret perks like appearing in the Buy Box,” Ars Technica reports.
With this framework allegedly in effect, the pair believe that customers are overpaying for items that are available for lower prices from other sellers. Amazon, they claim, prefers to display products that will incur the highest fees.
This is not the first time this theory has been discussed - according to Ars Technica, “In 2021, Amazon was fined more than $1 billion by the Italian Competition Authority over these unfair practices, and in 2022, the European Commission ordered Amazon to ‘apply equal treatment to all sellers when deciding what to feature in the Buy Box.’”
The implications here are profound. For a ‘customer obsessed’ company, this algorithm seems to completely diverge from their former values. If the claims have any truth to them, this strategy is deceptive and demoralizing to customers who thought the technology was there to help.
With different algorithms in place to support the customer experience, it is natural for customers to assume the recommendations are accurate and meaningful. If these are based on Amazon’s own commissions and seller fees, customers may have to take a step back and reconsider how they are using the platform and engaging with the brand as a whole.
Amazon Prime Video and the Rising Cost of Doing Business
On the other side of the business, Amazon is also under fire for allegedly deceiving customers with their Amazon Prime Video pricing structure updates. After an announcement that the brand would be adding advertisements to its streaming service, customers were invited to pay an extra $3 fee to go without ads.
While this isn’t necessarily a shocking change, Amazon’s announcement and plan of action seemed to go against other popular streaming services’ approach. The roll out prompted a lawsuit filed by Wilbert Napoleon, a California resident and Amazon Prime member.
The lawsuit claims that the company breached its contract with subscribers and broke consumer protection laws in both California and Washington.
“For years, people purchased and renewed their Amazon Prime subscriptions believing that they would include ad-free streaming,” the lawsuit says. “But last month, Amazon changed the deal. To stream movies and TV shows without ads, Amazon customers must now pay an additional $2.99 per month… This is not fair, because these subscribers already paid for the ad-free version; these subscribers should not have to pay an additional $2.99/month for something that they already paid for,” the lawsuit argues.
The distinction between Amazon and other streaming services updating their price structures seems to be the most frustrating for customers. While Netflix and Disney+ also introduced ad-supported plans, they offered an additional lower-priced tier. Amazon gave customers no choice, instating an ad-supported plan to anyone subscribed to their baseline plan. No lower tiers or alternative options were offered besides a more expensive, ad-free plan.
The announcement was also conveniently announced during the last week of December, between Christmas and New Years. Critics suggest that customers are not necessarily on top of their emails during this week, further hiding the fact that the change was occurring to minimize backlash.
Amazon’s Impact on the Future of CX
Amazon’s latest moves definitely conflict with their values of customer obsession. According to its own Leadership Principles, the brand has “leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”
These strategies are certainly not working toward their vision of earning and keeping customer trust. Both lawsuits point to the fact that customers feel deceived, undervalued and taken advantage of.
Trust is built on experiences that not only feel convenient and fast, but personalized and intuitive. If customers feel that the technology and features on your platform are working against them, it definitely will not lead to long-term trust.
At a time when customer-centricity is nearing a buzzword, it seems ridiculous that brands can continue to tout these values while lacking transparency and, even, empathy. While customers are aware that the cost of doing business is rising and costs sometimes go up, it feels deceitful to try to hide or cover up this information.
With both cases filed within the last week, I think it is clear that customers are unhappy with some of the company's latest actions. Amazon might want to take this moment to reconsider how they are engaging customers and building experiences. If Amazon continues to receive reactions like these, it will eventually test the patience and trust of customers and potentially lead to irreparable damage.
Convenience can only get brands so far in the digital age. With customers continually stating that they will leave brands after only 1-2 poor experiences, it is clear that brands must look to all aspects of their customer experience to ensure they are meeting customer needs and doing everything they can to exceed expectations.
While all of these are just claims, it’s pointing to a larger problem of skepticism in how massive tech-driven brands operate. For companies looking to combat some of this negativity, it seems like there is a lesson to be learned in leading with transparency and building trust above anything else.
