The Federal Trade Commission just set its sights on Amazon’s deal pricing schemes, responding to complaints that the giant online retailer misleads customers with its discounts. The FTC’s investigation is part of its review of Amazon’s agreement to buy Whole Foods for nearly $14 billion.
According to Reuters, the complaint was brought forward by advocacy group Consumer Watchdog. The organization tracked 1,000 products sold on Amazon in June and found that Amazon put reference (list) prices on 46% of them. The advocacy group says that in 61% of the cases, Amazon’s list price was higher than the price Amazon used for the same product in the 90 days. Thus, the deals looked like better bargains than they really were.
The FTC warns in its Guide Against Deceptive Pricing against using “fictitious” or “inflated” list prices to make the cost reduction look like a bargain. Amazon, meanwhile, said in the statement that Consumer Watchdog’s conclusions are wrong.
“The conclusions the Consumer Watchdog group reached are flat out wrong,” the company said in the statement. “We validate the reference prices provided by manufacturers, vendors, and sellers against actual prices recently found across Amazon and other retailers.”
However, Amazon ran into similar troubles in Canada, where it settled with Canada’s Competition Bureau in January and paid a fain of 1 million CAD, or just over $756,000.
Critics of Amazon’s proposed purchase of Whole Foods, which is pending approval from regulators, are worried that Amazon’s alleged deceptive discounting practices might spill over. Consumer Watchdog asked the FTC to stop the acquisition unless Amazon stops misleading customers on its website.