The company denied its practices led to higher prices for consumers
of ConsumerAffairsA proposed class action lawsuit accusing Amazon.com of misleading investors about its treatment of third-party sellers and expansion plans has been dismissed with prejudice by a U.S. federal judge.
The case didn't have any direct bearing on consumers but sparked allegations that the company had spiked prices at the expense of its customers and investors.
The lawsuit, which covered shareholders who bought AMZN stock between February 1, 2019, and April 28, 2022, alleged that Amazon engaged in deceptive practices to benefit its private-label products and misled investors about its warehouse expansion costs.
U.S. District Judge John Chun ruled that the case lacked sufficient evidence, preventing the plaintiffs from re-filing the lawsuit.
Allegations against Amazon
The lawsuit claimed that Amazon manipulated its pricing algorithm to keep its private-label products cheaper than those of third-party sellers, ultimately leading to higher prices for consumers overall. Shareholders also accused former CEO Jeff Bezos and current CEO Andy Jassy of secretly planning an excessive expansion of Amazons fulfillment centers in 2022.
According to the complaint, Amazon reported $2 billion in unexpected costs related to excess capacity expansion, leading to the company's first quarterly loss since 2015. The stock price dropped sharply, allegedly causing significant financial harm to investors.
Court finds no evidence
Judge Chun dismissed the allegations, stating that there was no compelling evidence that Amazon executives knowingly misled investors. He ruled that there was insufficient proof that Amazon deliberately covered up its fulfillment center expansion or used deceptive tactics to drive stock prices higher.
The judge further noted that Amazons leadership acted in the companys best interest by focusing on corporate profits and business growth rather than engaging in fraudulent behavior.
FTC antitrust probe lives on
While Amazon successfully fended off the class action lawsuit, the allegations played a role in triggering a Federal Trade Commission (FTC) antitrust probe into the companys business practices. The FTC lawsuit, filed in 2023, is scheduled for a non-jury trial in October 2026.
Amazon has consistently denied any wrongdoing in both cases, arguing that its pricing strategies and business expansions were lawful and designed to benefit customers and investors alike.
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