California AG Suit Targets Amazon’s Retail Scam

September 14, 2022 Press Release

Washington, D.C. — In response to a new suit against Amazon filed by California Attorney General Rob Bonta accusing the retail giant of inflating its prices by signing restrictive deals with third party sellers, the American Economic Liberties Project issued the following statement.

As California Attorney General Bonta’s suit meticulously details, Amazon’s retail empire is a scam predicated on third-party seller and consumer abuse,” said Katherine Van Dyck, Senior Legal Counsel at the American Economic Liberties Project. The complaint confirms what we already know: Amazon extorts small businesses that have no choice but to use its platform to reach customers and jacks up prices for working families everywhere. We’re encouraged to see yet another Attorney General fight to stop the anticompetitive conduct that is central to Amazon’s power.”

Attorney General Bonta’s suit is the latest in a series of actions from policymakers at the federal, state, and local level to arrest and dismantle Big Tech’s monopoly power. In Washington, D.C., Attorney General Karl Racine took direct aim at Amazon’s manipulation of the online retail market, abuse of third-party sellers, and price inflation. Like Racine’s suit, Bonta’s suit alleges that “Amazon has misled consumers into believing they are getting the low prices that would prevail in a competitive market when, in fact, it has deliberately caused prices to be generally higher everywhere else than they would be absent price parity.”

In Congress, the American Innovation and Choice Online Act, introduced by Senator Amy Klobuchar (D-MN), represents similar momentum to crack down on Big Tech’s ability to leverage their dominant market power at the expense of small businesses.  

An Economic Liberties analysis earlier this year revealed that Amazon raised fulfillment fees for sellers to 11% in January, and then tacked on an additional 5% fuel and gas surcharge in April. Yet despite the price of gas falling in recent months, the gas surcharge remains. This is in addition to Amazon’s 17% price increase for Prime in February, which impacted 126 million subscribers. Despite branding itself as a beacon of low prices, evidence suggests that Amazon’s restrictive agreements are responsible for raising costs for sellers, which are then passed on to consumers and other online retail platforms.

For more information on how Amazon’s monopolistic behavior distorts our economy, read American Economic Liberties Project’s report from 2020, Understanding Amazon.” 

Learn more about Economic Liberties here.

The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.