FTC Investigates Claims Amazon Uses 'Deceptive List Prices'

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"We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers". The organization has asked the FTC to stop Amazon from buying Whole Foods WFM until they stop listing deceptive reference prices.

In its most recent study of Amazon pricing, Consumer Watchdog found that 61% of all reference prices were higher than any observed price charged by Amazon in the previous 90 days, while 38% of all reference prices were higher than any price charged by Amazon that the group had ever reviewed. If that reference is made up, or the item never actually sells for that price, you can land yourself in some legal trouble.

The Federal Trade Commission is about to take a closer look at the situation...

Critics of Amazon's proposed purchase of Whole Foods, which is pending approval from regulators, are anxious that Amazon's alleged deceptive discounting practices might spill over.

Consumer Watchdog said the before-sale prices were the most misleading type of reference price used.

In response, Amazon said Consumer Watchdog's report was "deeply flawed".

Consumer Watchdog argues that Amazon inflated its listed prices by as much as 46 percent in order to fool customers into believing they are getting a better deal when they purchase at the discounted price.

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"Amazon appears to be increasing its use of reference prices on its site since past year, when it quietly eliminated many list prices", the report said.

Reuters reports that as part of that review, the FTC is fielding a request from a consumer group to investigate whether or not the company has deceptive pricing practices online.

It will be interesting what the FTC concludes from this investigation.

The e-commerce giant has 224 million regular customers and annual sales of more than $135 billion based on the promise of fast delivery and hot deals.

On July 6, Consumer Watchdog warned consumers about Amazon's deceptive pricing practices and said that the company's dubious behavior meant its big promotion should be called 'Slime Day, ' and not "Prime Day".

Herbert Hovenkamp, an antitrust law professor, though, doesn't think the FTC will forbid the acquisition even if Consumer Watchdog's accusations prove true.

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