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Amazon Accused of Mislabeling Sellers

The company is wrongfully classifying sellers as small or black-owned businesses.

It’s a common practice for consumers to make statements with their pocketbooks, often electing to purchase items from certain businesses over others for personal reasons.

Amazon has determined to help enable this buying behavior by being more transparent about a seller’s characterization, specifically adding identification badges for those who are considered to be a small or Black-owned business.

But a recent investigation by tech media outlet The Information suggests the labels, which have been available for about a year, are being applied to the wrong companies – a mistake that could be errantly influencing buyer behavior.

The Information’s exclusive report claims that Amazon’s American Small Business badge has designated sellers that, in some cases, are anything but. Products included in this category, they say, included things like a bottle of Johnson & Johnson shampoo and a lamp from a Chinese seller – even a coffee company with a $1.1 billion market cap.

The Information says that Amazon likewise gave the Black-owned business badge to companies that didn’t, in fact, have Black owners.

Amazon has long been criticized for its role in the dwindling of consumers’ spending within their own local communities, and the badges may have been meant to address that. After the article was published, Amazon reportedly removed the badges that were included in error, however, critics see it as problematic that Amazon’s program appears to have such flaws.

The Information quoted Jason Boyce, CEO of Avenue7Media – a firm that helps companies sell via Amazon – who called the badges “fishy” adding that if Amazon isn’t managing the program they’re “disadvantaging true small businesses” and “giving companies that don't need the help an unfair advantage."

And despite Amazon’s efforts with the badge program, some critics don’t believe the company's heart is in the right place. 

Stacey Mitchell, a co-director of the Institute for Local Self-Reliance, told The Information that "It's very much in Amazon's interest to try to suggest that in fact they're supporting small businesses rather than eating their lunch." 

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