How Ecommerce Says Discounts But Prices Rise, US Citizens Are Deceived Tech – 2 hours ago

Jakarta, CNBC Indonesia – is accused of using a series of illegal strategies to increase profits in its e-commerce business. The fraud included an algorithm that forced Americans to pay more for goods, which totaled US$1 billion (Rp. 15 trillion).

This figure was revealed by the US Federal Trade Commission, which detailed it in a new court filing on Thursday (2/11). Following up on an FTC lawsuit filed last September.

Amazon created a secret algorithm internally coded ‘Project Nessie’ to identify certain products whose price increases are predicted to be followed by ecommerce other than Amazon.

“Amazon used Project Nessie to siphon more than a billion dollars directly from Americans’ wallets,” said the FTC, quoted by Reuters, Friday (3/11/2023).

Amazon spokesman Tim Doyle said the FTC misinterpreted the pricing tool and the company stopped using it several years ago.

“Nessie is used to stop price matching from producing the unusual result of prices being so low that they are unsustainable,” Doyle said.

However, according to the lawsuit, Amazon began testing its pricing algorithm in 2010 to see whether other online stores tracked Amazon prices. Then, Amazon raised the price of products that were known to be monitored by competitors.

Once outside retailers start matching or raising prices, Amazon will continue to sell products at increasingly inflated prices. This practice, according to the FTC, allows Amazon to reap additional profits of up to US$ 1 billion.

Amazon stopped the algorithm during the Prime Day shopping festival and the holiday shopping season, when the media and consumers closely monitor price movements on Amazon.

“After the public’s focus shifted elsewhere, Amazon reinstated Project Nessie and ran it more widely to fill the gap,” the lawsuit says.

Amazon in April 2018 used it to set prices for more than 8 million items purchased by customers that collectively cost nearly $194 million, before discontinuing it in 2019.

The FTC called Nessie’s algorithm a method of unfair competition because it manipulates other online stores into raising prices, thereby allowing Amazon to do the same.

The FTC complaint also alleges Amazon attempted to hide information about operations from antitrust enforcers by using a disappearing message feature on its Signal messaging app and says the company destroyed communications from June 2019 through early 2022.

[Gambas:Video CNBC]

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