Newest UK insurance player Amazon hit with class action in retail business

British case described as "landmark claim"

Newest UK insurance player Amazon hit with class action in retail business

Insurance News

By Terry Gangcuangco

E-commerce giant Amazon, which recently made headlines for its foray into the British insurance comparison market, is now facing a £900 million demand to compensate UK customers in what has been described as a “landmark claim” against its retail operations.

In a release, Hausfeld & Co LLP said Amazon is accused of unlawfully abusing its dominant position, in supposed breach of section 18 of the UK Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union.

The firm noted: “According to the claim, Amazon steers potential purchasers to products which are not designed to be the best offers for consumers. Rather, the so-called ‘Buy Box’ offers are systematically biased to favour goods sold by Amazon itself as part of its retail business; and/or by third-party sellers who pay to use Amazon’s order fulfilment and delivery services (which are a key source of revenue for Amazon).

“Other sellers, who do not pay for Amazon’s fulfilment services, are nearly always excluded from the Buy Box, stifling their ability to offer consumers a better deal, and leaving consumers out of pocket. It will be alleged that Amazon uses the Buy Box feature to manipulate consumer decision-making – directing customers to the product featured prominently in the Buy Box, and thereby obscuring the full range of options available to them, which may be cheaper and/or offer greater value.”

The proposed class representative in the action is Consumer & Public Interest Network chair Julie Hunter, who is an expert in consumer research, advocacy, and protection. Hunter is a member of statutory body Financial Services Consumer Panel.

“Many consumers believe that Amazon offers good choice and value, but instead it uses tricks of design to manipulate consumer choice and direct customers towards the featured offer in its Buy Box,” asserted Hunter. “Far from being a recommendation based on price or quality, the Buy Box favours products sold by Amazon itself, or by retailers who pay Amazon for handling their logistics. Other sellers, however good their offers might be, are effectively shut out – relegated down-page, or hidden several clicks away in an obscure corner of Amazon’s website.”

Last week, the retail titan launched the Amazon Insurance Store in the UK. The new price comparison website was introduced with initial partners Ageas UK, Co-op, and LV= General Insurance. There’s no word as to how the British class action might impact the new undertaking.

Meanwhile Hausfeld & Co LLP partner Lesley Hannah stated: “Most consumers use the Buy Box when purchasing products on Amazon – estimates range from 82% to 90%. This means that millions of consumers have paid too much and been denied choice. This action seeks fair redress for them.”

The Competition Appeal Tribunal case in London is an opt-out collective action. Anyone who lives in the UK and has made purchases on or on the Amazon app since October 2016 is an eligible member of the claimant class without having to actively opt-in to the claim.

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