Attorney General Mayes Sues Amazon for Unfair and Deceptive Practices

PHOENIX – Attorney General Kris Mayes today announced that Arizona has sued Amazon, accusing the online giant of 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."

The first lawsuit focuses on Amazon Prime's cancellation process, which the suit alleges is intentionally confusing and misleading, a strategy Amazon tellingly called Project Iliad. Amazon’s cancellation process allegedly required users to navigate a complicated and manipulative interface with skewed wording, confusing choices, and repeated nudging. Such methods, known as “dark patterns,” exploit cognitive biases to influence and manipulate consumer choices.

These tactics include using repeated misdirection to make cancellation difficult through the use of misleading wording and graphics, and emphasizing the benefits lost upon cancellation to dissuade users from leaving the service. Internal documents allegedly showed that Project Iliad succeeded in reducing Prime cancellations by 14%.

The second lawsuit targets Amazon's Buy Box algorithm, which determines which offer for a given product is made available via the “Buy Now” or “Add to Cart” buttons. Amazon portrays itself as a cost-conscious retailer and publicly asserts that the Buy Box algorithm is intended to choose the offer that most consumers would prefer.

But 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 Fulfillment by Amazon (FBA) sellers over better non-FBA options.

Sellers who use FBA must also pay Amazon additional fees to warehouse products, pack and label items for shipping, and deliver them to customers, even if there are cheaper and better options for all of those services. These practices not only mislead consumers but also unfairly impact smaller third-party sellers.

Additionally, the lawsuit accuses Amazon of unfairly maintaining its market dominance by enforcing unlawful price parity agreements through its Business Services Agreement. These 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."