FTC investigating allegations of Amazon's deceptive discounting

Marcus Newton
July 22, 2017

According to Reuters sources close to the investigation are to broaden the scope of this probe to encompass allegations by Consumer Watchdog, a pressure group, which tracked the pricing of 1,000 items throughout June. That report looked at listings for 4,000 products and found that in almost 40% of cases, the prices displayed were using reference prices out of whack with everyone else.

An analysis found that in 61 percent of products with reference prices, Amazon's reference prices were higher than it had sold the same product in the previous 90 days, Consumer Watchdog said in a letter to the FTC dated July 6.

If true it would be a particularly sneaky form of psychological trickery: tricking customers into thinking Amazon was offering them a great deal vs. regular prices, when in truth no deal existed.

Following receipt of the letter, the agency made informal inquiries about the allegations, according to a source who spoke on background to preserve business relationships.

The FTC is playing a dual role of investigating charges of deceptive advertising as well as assessing the proposed Amazon-Whole Foods merger.

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Amazon in its statement said of the study said: "The conclusions the Consumer Watchdog group reached are flat out wrong".

Consumer Watchdog said the before-sale prices were the most misleading type of reference price used. It paid a fine of C$1 million ($756,658.60) as part of the settlement.

"That practice began to shift a year ago, when Amazon - under widespread legal challenges - started quietly phasing out the use of "list prices" meant to reflect a product's standard retail price from which Amazon was discounting!" More generally, Wikibuy found that Amazon's prices changed hour-by-hour, state-by-state and shopper-by-shopper.

The FTC has previously gone after Amazon.

Amazon is seeking individual arbitration with the buyer in the case. Marcia FudgeMarcia FudgeLawmakers push regulators on how Amazon's Whole Foods deal could affect "food deserts" Dems announce "unity commission" members If Democrats want to take back the White House start now MORE (D-Ohio), the lawmakers said that DOJ and FTC should look at the acquisition "beyond the normal antitrust process that only examines competitive impact".

Other reports by MaliBehiribAe

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