Amazon faces a class-action lawsuit, will sellers also be held accountable?

In the early days of the outbreak, hygiene and epidemic prevention supplies were snapped up. Amazon became the main channel for consumers to buy these products, and related sellers also made a lot of money. But now these companies may face lawsuits.

In July 2021, a group of consumers filed a class action lawsuit in the Washington federal court, accusing Amazon of "illegally raising prices during the COVID-19 pandemic." The plaintiffs filed three charges against the e-commerce giant: 1. Violation of the Washington Consumer Protection Act ("WCPA"); 2. Negligence; 3. Unjust enrichment.

The plaintiffs emphasized that since the outbreak of the epidemic, Amazon's sales have increased by more than 1,000%, leading to price increases on a range of products, including masks, cold medicines, toilet paper, painkillers, baking soda, flour, yeast and disinfectant wipes.

The plaintiffs claim that Amazon is responsible for price increases not only for Amazon-branded or own-owned products, but also for products sold by third parties on its platform. The plaintiffs cite several instances where Amazon platform products were sold at prices significantly higher than pre-pandemic prices.

At the beginning of the epidemic, Amazon acknowledged that there were price increases on its platform and promised to remove third-party sellers who engaged in price gouging. The plaintiffs claimed that Amazon can still be held accountable for the price increases of third-party sellers. They blamed it on Amazon's policies, including "Sold by Amazon", "Minimum Buy Price", and "Automatic Pricing" services for third-party sellers.

The plaintiffs claim that under these policies, Amazon "no longer acts as a passive intermediary" but instead "controls the sale and marketing of all third-party products on its platform." The plaintiffs also note that Amazon has the ability to set prices, impose price caps, and "reserves the ultimate right to reject prices." But Amazon does not control prices on its own platform.

Amazon said it is continuing to investigate the allegations in the complaint, and the two sides recently agreed to extend the deadline for responding to the complaint.

Although the focus of this lawsuit is on Amazon, the National Law Review said that third-party sellers also need to be prepared for possible claims from consumers. Sellers are reminded to comply with platform and local regulations, otherwise they may be held accountable later.

Amazon

Epidemic prevention supplies

Class Action