(Bloomberg) -- Most Amazon.com Inc. shoppers are familiar with the “#1 Best Seller” badge that pops up for many products. Along with reviews and ratings, it’s a way to gauge whether an item is worth buying.

But sometimes the product isn’t actually a best-seller. 

Unscrupulous merchants are putting some popular items in slow-selling product categories to trick Amazon algorithms into thinking it’s a hotter seller than it really is. The scam Bloomberg uncovered mostly focuses on smartphone mounts for car dashboards, phone cases and USB drives. For example, one mount recently showed up in the “replacement axle shafts” category. The item rocketed to best-seller status because many more people are shopping for phone mounts than car axles.

It’s not clear how many other kinds of product are being targeted, but affected merchants say they’re losing hundreds of thousands of dollars in some cases and that Amazon needs to crack down before the scheme becomes more widespread. With US shoppers expected to spend $120 billion online this holiday season, scammers have plenty of incentive to game the system. 

The product categories, created by Amazon but selected by merchants, appear right next to the best-seller badge. But people often don’t notice the trickery because they’re shopping quickly—an estimated 28% of Amazon purchases are completed within three minutes—and because most customers use mobile devices, where the fine print is easily overlooked. 

“Customers are less inclined to look closely at details, since they are using a smaller screen and probably shopping and buying faster compared to purchasing on a desktop or laptop computer,” said Michael Levin, a partner with Consumer Intelligence Research Partners in Chicago.

Bloomberg recently identified more than 25 examples of smartphone mounts, all sold by China-based merchants, with best-seller badges that had been slotted into incorrect categories. A magnetic mount sold by LISEN Direct in China was the best-seller in a category for replacement windshield wiper hoses.

The perpetrators win by boosting their own sales, which can jump by as much as 50% with the best-seller imprimatur, according to Lesley Hensell, a co-founder of Riverbend Consulting, which advises Amazon sellers. Consumers get played but may not even notice unless the product turns out to be junk. The big losers are Amazon sellers who play by the rules; their products are artificially pushed down in search results, making it unlikely shoppers will see them.

An Amazon spokesperson said the company uses machine learning to detect products placed in incorrect categories, as well as manual reviews by product classification experts when needed. Sellers who place products in the wrong categories usually receive a warning, and repeat offenders can be suspended from selling on the platform, she said. Amazon’s best-seller rankings are updated hourly based on overall sales on the site, according to the spokesperson.

“We work hard to create a trustworthy shopping experience by protecting customers, selling partners and Amazon from fraud and abuse, and we have systems in place to detect suspicious behavior,” she said by email. “There is no place for fraud at Amazon, and we will continue to pursue all measures to protect our store and hold bad actors accountable.”

One phone accessories merchant, who said the scam caused monthly sales to plunge 50% during the holiday season, has filed hundreds of reports with Amazon over the past month with mixed results. Sometimes the company removes a product from an incorrect category only for it to reappear in another category a few days later. Or Amazon responds to the complaint by saying nothing is wrong at all, said the seller, who requested anonymity for fear of retribution.

In response to one report that a phone mount received the best-seller badge in the “sunroof” product category, Amazon sent a message saying “we cannot take action on the report as no violation has been identified.” The merchant equated his efforts to stop the scam to “fighting a wall.”

Amazon has long been criticized for not doing enough to police its online marketplace, where almost 2 million merchants compete to sell hundreds of millions of products. The site relies heavily on automation so merchants can run their businesses with little input from Amazon employees. Automation keeps costs down for the company, but also exposes the site to manipulation when sellers find cracks in the code.

Other scams previously reported by Bloomberg include “sniping,” when a seller buys a competitor’s products only to leave critical reviews and discourage shoppers from buying them. Fake positive reviews are another long-standing challenge, and Amazon has filed lawsuits targeting rings that sell favorable product reviews. Last year, the e-commerce giant was among more than 700 companies warned by the Federal Trade Commission that fake reviews and other “deceptive endorsements” could face penalties exceeding $40,000 per violation.This isn’t the first time Amazon merchants have miss-categorized products to fool the algorithms. During the pandemic, some merchants put packs of face masks in the book and video game categories to circumvent Amazon’s product-safety rules regarding the coronavirus, said Juozas Kaziukenas, founder and CEO of Marketplace Pulse, which monitors online sales.

The phone mount sellers are likely tricking Amazon’s algorithms because the products are technically car accessories and don’t trigger an alarm when placed in unrelated car-part categories, said Martin Heubel, a former Amazon product category manager who now advises merchants. Sellers can move products from one category to another, and an algorithm makes an initial determination if the switch seems legit, he said. If the machine sees something amiss, it gets flagged for manual review, which isn’t happening for the phone mounts, he said.

“This is a popular tactic because even if you are deliberately manipulating the rankings, Amazon might see it as a mistake and let you off with a warning,” Heubel said.

Hensell, the consultant, said she helped two clients regain the best-selling badge after losing it to sellers who put their products in the wrong category. “It’s very harmful to the legitimate seller whose product in that category gets crowded out,” she said. “You’re supposed to earn the best-seller badge with a great product and good customer reviews. It’s extremely valuable, which is why this needs to stop.”

©2022 Bloomberg L.P.