AMAZON SETTLES LAWSUIT WITH CALIFORNIA COUNTIES

Agrees to pay $2M in penalties, revise pricing disclosures

Amazon has agreed to pay $2 million in penalties and restitution after settling a lawsuit with San Diego County and five other California

counties over potentially misleading price listings on its website, it was announced last week.

The complaint filed a week earlier in San Diego Superior Court alleged that the e-commerce giant’s use of “reference pricing” in some of its online advertisements was either misleading or potentially misleading.

The complaint pointed to the use of “was” or “list” prices on the website, which advertise savings to consumers and routinely have strike-through lines across them. A “was” price is the price at which Amazon previously offered the product. “List” price advertisements suggest to consumers the price at which the product is commonly offered or sold by another seller, supplier or the product’s manufacturer.

Prosecutors said there were issues with how Amazon determined these reference prices and whether words like “was” or “list” were used in a manner that was misleading to consumers.

The San Diego County District Attorney’s Office was joined in the complaint by the district attorney offices in Riverside, Alameda, Santa Clara, Santa Cruz and Yolo counties.

In addition to the monetary penalties, the stipulated judgment reached last week requires Amazon to make revisions to its pricing disclosures, which includes providing hyperlinks on its site that give consumers “clear definitions of the meaning of ‘was’ and ‘list’ price advertisements, so they understand the nature of the advertised savings.”

The District Attorney’s Office statement said Amazon “worked promptly and cooperatively throughout the district attorneys’ investigation and has already implemented changes to its website and pricing algorithms consistent with the final judgment.”