Consumer group complains over Amazon pricing
A consumer interest group has taken complaints about Amazon’s advertised prices to California Attorney General Xavier Becerra, demanding an investigation and saying the company is “ripping consumers off.”
Consumer Watchdog argued that “list” or “was” prices, displayed near the current price and showing the putative savings by the buyer, are often bogus and much higher than what most other retailers are charging.
“Consumer Watchdog believes Amazon and its executives are cynically flouting the law to increase sales and profits,” wrote John Simpson of Consumer Watchdog in a petition to Becerra. “A company cannot claim it’s discounting something from a certain price when virtually nobody charges that amount.”
If the comparison pricing were false, it could violate the California Business and Professions Code’s rules on advertised values.
The attorney general’s office declined to confirm or deny any investigation of Amazon. The state filed an amicus brief in a 2010 case when California district attorneys sued Overstock.com over its comparison pricing.
In that case, a judge ruled in 2014 that Overstock had to pay nearly $7 million in penalties for the deceptive pricing. Overstock appealed the ruling.
Amazon said the recent Consumer Watchdog complaints are “misleading.”
“We validate list prices against actual prices recently found across Amazon and other retailers,” the company said in an email. “We eliminate List Price when we believe it isn’t relevant to our customers.”
Amazon Canada was hit in January with fines of more than $750,000 from that country’s Competition Bureau over misleading prices.
In that case, the Canadian investigation found that Amazon had failed to confirm the accuracy of prices from its suppliers. Amazon made changes to the way it shows prices after the settlement, changes that went into effect at all Amazon sites, the Competition Bureau said in January.
Amazon dropped list pricing last year in some categories like groceries, and a July study by comparison-shopping site Rout found that only about 30 percent of products showed list prices, down dramatically from May, when more than 70 percent featured them.
Consumer Watchdog conducted its own research over three days in February to compare prices on more than 4,000 products, the group said.
It found that Amazon has reference prices on more than 25 percent of listings, and that the majority of those “crossed-out prices” were higher than the prevailing market price — the key language in the California code on the issue.
“In other words, the reference prices were an entirely bogus notional price that created the false impression that customers were getting a deal when they were not,” Consumer Watchdog said in a news release. “When correcting the inflated list prices, the fictitious discounts often vanished, the study found.”
The group said it found that Amazon overstated median market prices by about 20 percent on average.
Amazon has also begun using a “was” price on listings that is compiled from recent price history, the company said. The “was” price is intended to to be an alternative to list prices.