SEATTLE, United States — Amazon.com Inc. should be investigated by US regulators over undisclosed paid endorsements on Prime Day, a consumer advocacy group says.
Washington-based Public Citizen asked the Federal Trade Commission in a letter dated Tuesday to examine the online retailer’s associates programme, which is used by Amazon to build word-of-mouth sales on the platform in exchange for commissions.
“When consumers consider an associate’s recommendation for a ‘best buy,’ it is of material interest to them if the associate has a monetary interest in ensuring that the consumer does, in fact, buy,” Public Citizen President Robert Weissman wrote.
The complaint comes as Amazon is facing increasing scrutiny in Washington over whether it’s harming competition. As part of an agreement with the Justice Department, the FTC took responsibility for a potential antitrust investigation into Amazon. The agency enforces deceptive advertising cases against companies.
“All associates must follow our associates guidelines, which include obligations to identify as an associate and provide all legally required disclosures,” Amazon said in a statement. “Those who don’t are subject to action including potential closure of their account.”
Amazon Prime Day, a two-day summer sales event, was started in 2015 to lure new Prime members, who pay monthly or annual fees for shipping discounts and other perks.
Under Amazon’s associates programme, selected reviewers refer their audiences to products on Amazon in exchange for a commission on subsequent sales. Public Citizen argued they function as endorsers who are paid for the endorsement, which requires disclosure.
Public Citizen said it found numerous examples of Prime Day recommendations like posts on Instagram with no disclosures or inadequate disclosures. It acknowledged some reviews may be genuinely independent.
By David McLaughlin; editors: Sara Forden and John Harney.