Amazon's fast shipping and large array of products have made it one of the most popular places for online shopping, but that doesn't mean its avoided backlash from users. In 2020, Amazon was the target of a record number of customer complaints due to delays, missing packages, and damaged items. And in September of this year, a number of customers threatened to cancel their Amazon Prime memberships altogether after the company announced it would be adding a new fee to Whole Foods delivery orders. Now, the marketplace is under fire once again, this time getting hit with a federal complaint. Read on to find out what has Amazon in the hot seat.
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Amazon is under fire for potentially misleading customers with advertisements.
ShutterstockA new complaint filed with the Federal Trade Commission (FTC) is alleging that Amazon is potentially misleading customers with its paid advertisements. The complaint, which was filed Dec. 8 by a labor union coalition called the Strategic Organizing Center (SOG), says that the retailer is "unlawfully deceiving millions of consumers" by violating a section of the FTC Act.
Amazon is "failing to 'clearly and conspicuously' disclose which of its search engine results are paid advertisements rather than 'organic' search results," the SOC complaint states.
A report found that a decent portion of the marketplace's search results are paid ads.
ShutterstockResearchers at the SOC analyzed more than 130,000 search results from Amazon before the organization placed their complaint. According to the SOC, more than a quarter of Amazon search results were paid for by third parties. The filing states that the pervasiveness of these paid promotions "adds significantly to the level of consumer harm" caused by the retailer's alleged FTC violation.
"It's really the combination of how often the advertisements on Amazon platforms are deceptive, together with how prevalent the ads are among all of its search pages, that really calls into question for us whether Amazon's entire search platform itself is deceptive," Joan Moriarty, the research director for SOC, told CNN on Dec. 9.
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SOC claims Amazon uses several practices to make sponsored content indistinguishable from other content.
ShutterstockAccording to CNN, online search engine results are required to use left-placed shading, borders, and large text boxes to properly label paid products. The SOC's complaint alleges that Amazon uses the same gray shading for both advertised products and organic search results, which could confuse shoppers. Paid ads are also labeled with text that says "sponsored," but the SOC claims that this text is too small and too light to be properly distinguishable.
Besides shading and text, the organization's complaint alleges that Amazon uses "lazy loading" of paid ads as well, which means that the sponsored labels load up to three seconds after the rest of the ad has been loaded onto the search page result.
"Amazon customers should be very conscious and examine closely when they do a search on Amazon whether they’re getting an advertisement or an organic search result," Marka Peterson, the SOC’s legal director, told The Washington Post. "They should be very aware of the different methods that Amazon uses to obscure its advertising."
Amazon has spoken out against the SOC's complaint.
ShutterstockAmazon is fighting back against the idea that its paid advertisements are not clearly marked. Tina Pelkey, a spokeswoman for the company, told The Washington Post in a statement that the SOC's complaint "misstates FTC guidance," while an Amazon spokesperson also called their report "incorrect" in a statement to CNN.
"Ads in Amazon's store always include a clear and prominent 'sponsored' label, implemented in accordance with FTC guidelines," Pelkey said. "We design our store to help customers discover products we think may best meet their needs—sponsored ads is one of the ways to help them find products they may be interested in."
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