Amazon Accused Of Raking In $1 Billion Through Deceptive Practices, According To FTC Suit

The Federal Trade Commission (FTC) has leveled serious allegations against Amazon.com Inc. AMZN, claiming the e-commerce giant engaged in deceptive practices that increased consumer prices by over a billion dollars.

What Happened: Details from a previously filed lawsuit in September came to light after a federal court in Seattle released a version with fewer redactions.

According to the FTC, Amazon utilized a covert algorithm, known internally as "Project Nessie," to artificially raise prices on certain items, anticipating that competitors would mirror these increases.

This tactic, the FTC asserts, directly siphoned more than a billion dollars from American wallets, as Reuters reported.

Responding to these allegations, Amazon spokesperson Tim Doyle said that the FTC grossly mischaracterized the pricing tool, adding that the company had ceased using it years prior.

Doyle clarified that "Nessie" was initially intended to prevent price matching from leading to unsustainably low prices.

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According to the report, the FTC's complaint suggests that, since 2010, Amazon has been experimenting with this pricing strategy to manipulate market prices. The agency has accused the company of keeping prices high even after competitors adjusted their pricing, leading to undue profit gains.

It was also revealed that Amazon strategically suspended this algorithm during periods of high scrutiny, such as Prime Day and the holiday season, only to reactivate it later to recover any potential losses.

The lawsuit further accuses Amazon of obfuscating its practices by utilizing ephemeral messaging on Signal and destroying pertinent communications from June 2019 to early 2022.

Additionally, the FTC has criticized Amazon for mandating that Prime sellers use its delivery services, contributing to a steep rise in seller fees from 27% in 2014 to 39.5% in 2018.

Moreover, the FTC highlighted Amazon's exclusion of other large online retailers, such as Walmart Inc. WMT, from its marketplace.

The complaint includes an instance where Amazon allegedly coerced a seller into ensuring their products were not offered at lower prices on Walmart than on Amazon.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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