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There could be multiple reasons for why the Laravel Queued Job with a backoff feature is not functioning properly on SQS. Here are some of the possible reasons:

1. Improper configuration: The backoff feature may not work if the Laravel queue worker is not configured properly with the right settings for the SQS queue.

2. Queue Visibility Timeout: If the queue visibility timeout is not set correctly, the message may be picked up multiple times by the queue worker, resulting in a repetitive processing queue loop.

3. Dead Letter Queue (DLQ): If a downstream service fails to process a message in the queue, the message might be sent to DLQ. In case Laravel doesn't have proper access to the DLQ or the message processing permissions for the message, the processing retry loop would continue.

4. Long Polling: Long polling is retrieving messages from the SQS queue while maximizing the number of messages retrieved to reduce the waiting time. However, if the waiting time is set too long, it may slow down the backoff feature.

5. PHP version: If Laravel is running on an unsupported PHP version, the queuing system might not work as expected.

6. Network latency: In case of increased network latency, the queuing system might keep retrying a task rather than backing off, leading to a loop failure.

To diagnose and solve the issue, you can check the Laravel error stack trace or debug logs, review the SQS policy, dead letter queue settings, and network configurations, and ensure Laravel and SQS are compatible.