Amazon is being investigated by the FTC for alleged deceptive discounting

Shawn Knight

Posts: 12,597   +124
Staff member

Amazon’s discount policy is being investigated by the Federal Trade Commission following a complaint from a consumer advocate group. A source reportedly close to the matter tells Reuters that the probe, which is part of the FTC’s review of Amazon’s agreement to purchase Whole Foods, was prompted by Consumer Watchdog.

The consumer advocate group said it monitored around 1,000 products on Amazon’s website last month and noticed that around 46 percent of them showed a “reference” price (the original price before being marked down as part of a sale).

Consumer Watchdog contends that in 61 percent of products with reference prices, Amazon’s reference price was higher than the price the product had sold for in the previous 90 days. In other words, the group claims that Amazon inflated the reference price during a sale to make it appear as though the discount offered by the sale was greater than what it regularly sells for.

The FTC has specific guidelines in place that warn against using a “fictitious” list price for the purpose of making a sale look like a better bargain than it actually is.

A spokesperson for Amazon told the publication that the conclusions reached by the Consumer Watchdog group are flat out wrong. The spokesperson added that they validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.

Amazon settled a similar complaint with the Competition Bureau in Canada back in January. The e-commerce giant was fined C$1 million ($756,658.60) as part of that dispute.

Image courtesy Jaap Arriens, Getty Images

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psycros

Posts: 3,202   +3,400
Its a given that some of the highest priced sellers you find on Amazon are indirectly owned by Amazon itself. Being your own competition is one of he oldest tricks in the book.
 

Comanche

Posts: 55   +50
I always noticed that, they come up with this 50% off discount, and people jump and buy the product which in reality is more like a 10% to 15% discount
 

Trillionsin

Posts: 1,878   +462
Yuuuup. Not really surprising.

I always noticed that, they come up with this 50% off discount, and people jump and buy the product which in reality is more like a 10% to 15% discount
Sometimes it's not even that at all. I've check prices for several items, that even with that 40% off discount, the item is still HIGHER priced than in some places. Of course, it varies by item and such... and not all are like this. Sometimes they actually are cheaper... if you are lucky. lol
 

That Other Guy

Posts: 47   +25
Who is silly enough to buy something ONLY because its 50% off? don't most people compare prices now? especially online, just open another tab....
That being said though, I do absolutely hate websites that purport regular price far higher just to make their so called sale more appealing. playing on the psychology that people feel good thinking they got an amazing deal. more so when they state "only 1 left!" or "price valid for the next X minutes"
 

Reehahs

Posts: 968   +600
Kept being put off by delivery cost where buying only makes sense with Prime membership just sometimes.
 

Uncle Al

Posts: 7,485   +5,992
I have noticed on a lot of their pop up ads that appear in general searches, they advertise a price that is about 40% lower than when you go to the web site .... a sort of bait and switch tactic. I have written and complained many times but the complaints go nowhere and with Trump trying to pull the teeth out of the remaining consumer advocacy's it doesn't look like it will get better......
 

EClyde

Posts: 2,342   +915
I have noticed on a lot of their pop up ads that appear in general searches, they advertise a price that is about 40% lower than when you go to the web site .... a sort of bait and switch tactic. I have written and complained many times but the complaints go nowhere and with Trump trying to pull the teeth out of the remaining consumer advocacy's it doesn't look like it will get better......
What exactly is Trump doing?
 

MilwaukeeMike

Posts: 3,213   +1,462
I have noticed on a lot of their pop up ads that appear in general searches, they advertise a price that is about 40% lower than when you go to the web site .... a sort of bait and switch tactic. I have written and complained many times but the complaints go nowhere and with Trump trying to pull the teeth out of the remaining consumer advocacy's it doesn't look like it will get better......
What exactly is Trump doing?
didn't you know? Everything is Trump's fault now.


Back to the story here though - they might have some trouble proving Amazon did anything wrong here. see this part -
The [amazon] spokesperson added that they validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.
The key word there being 'recently'. The price of something isn't determined by what it 'used' to sell for - it's determined by it's demand and available right now. Example: If a book sells for $20 for 6 months straight and then Oprah brings it on her show and says how much she loves it, and the price everywhere goes up to $25 overnight and them Amazon says $5 off the $25 price - are they doing anything wrong? No - that's completely true and honest - and yet this watchdog group could say 'Look - they're saying something is on sale when it's really selling it for the price it's always been!'

Historical prices are irrelevant - in order to prove Amazon did anything wrong you'll have to compare to prices on the same day - maybe even the same time. My guess Amazon wins this one easily.
 
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Spect

Posts: 33   +24
I use camelcamelcamel.com it's an Amazon price watching site. You can link your Amazon wishlist to it and it tracks all the products your interested in buying. And you can also look up any product and see what's the cheapest it ever sold for on Amazon. Forget all their sale gimmicks. You can save alot just buy buying at the right time.
 

CaptainTom

Posts: 414   +220
Hmmmm. I didn't even know that was a law lol.


So those insane "Legal Reference Prices" must have required some guy to scour the internet for the highest price they can find so they can list it.
 

Uncle Al

Posts: 7,485   +5,992
didn't you know? Everything is Trump's fault now.


Back to the story here though - they might have some trouble proving Amazon did anything wrong here. see this part -

The key word there being 'recently'. The price of something isn't determined by what it 'used' to sell for - it's determined by it's demand and available right now. Example: If a book sells for $20 for 6 months straight and then Oprah brings it on her show and says how much she loves it, and the price everywhere goes up to $25 overnight and them Amazon says $5 off the $25 price - are they doing anything wrong? No - that's completely true and honest - and yet this watchdog group could say 'Look - they're saying something is on sale when it's really selling it for the price it's always been!'

Historical prices are irrelevant - in order to prove Amazon did anything wrong you'll have to compare to prices on the same day - maybe even the same time. My guess Amazon wins this one easily.
Well contrats ... You completely missed the point! I got two pop up ads this morning from them lising a price that was only 1/2 of what it lists on their web site. Being a Prime member I thought they listed that but the Prime price is higher still. It still meets the litmus test for bait and switch in anybody's book .... except for yours.
 

MilwaukeeMike

Posts: 3,213   +1,462
Well contrats ... You completely missed the point! I got two pop up ads this morning from them lising a price that was only 1/2 of what it lists on their web site. Being a Prime member I thought they listed that but the Prime price is higher still. It still meets the litmus test for bait and switch in anybody's book .... except for yours.
Speaking of missing the point - this issue in the story isn't about bait and switch - it's about bogus 'retail' pricing. And my response to your post was because you were blaming Trump for it. Ripping Trump is WAY off topic.

if you're getting ads from Amazon for incorrect prices, that is obviously bait and switch. But this story isn't about that - and it's not about any policy Trump may or may not be in favor of that might affect anything Amazon is doing.
.