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Labor unions say Amazon ads breached federal rules

The digital marketplace is coming under scrutiny for how it labels sponsored products.

WASHINGTON (CN) — A coalition of labor unions filed a complaint Tuesday with the Federal Trade Commission against Amazon, alleging the digital marketplace juggernaut is deceiving consumers and violating federal law by failing to clearly disclose which of its product search results are paid advertisements.

The Strategic Organizing Center, an organization representing four labor unions including the International Brotherhood of Teamsters and the Communication Workers of America, alleged in its complaint that a large swath of search results on the platform are not clearly labeled as promoted content, and that Amazon “is deliberately obfuscating identification of a key category of advertisements by delaying their ad labels from loading for several seconds.”

“For the country’s largest online retailer, with a growing dominance in online advertising, to be engaged in such wholesale deception of consumers demands immediate and aggressive action by the Commission,” the center wrote in the complaint.

Federal standards require online retailers to explicitly label ads and promoted content to prevent consumers from being misled.

Researchers for the center analyzed more than 130,000 product search results and allegedly observed that Amazon made advertisements look like the natural result of a product search — a violation of federal rules for making online advertisements on search pages clear to consumers.

The center said its research found more than one-quarter of product search results were actually advertisements for third-party sellers. 

“The overwhelming proportion of advertisements — advertisements which are not identifiable as ads — within Amazon’s search pages throws into question the fundamental integrity of ‘search’ on Amazon’s online platform, and indicates Amazon is engaging in a much broader deception of consumers by representing these pages as ‘search results’ at all,” the complaint states.

The group said its findings indicated widespread violations of advertising rules, which they claim may be intentional on the part of Amazon.

“In addition, however, Amazon’s advertising practices are so categorically at odds with the guidelines for preventing deception that it suggests Amazon may have attempted to deliberately deceive customers by formatting ads in ways it knew would prevent them from recognizing advertisements among its search results,” the complaint states (emphasis in original).

Calling on the FTC to investigate Amazon’s advertising practices, the center requested the commission take action against the corporation if it’s found in violation of federal rules.

Representatives for Amazon could not immediately be reached via email for comment.

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Categories / Business, Consumers, Technology

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