FTC probing allegations of Amazon's deceptive discounting

On July 20, 2017, post-market, Reuters reported that the Federal Trade Commission ("FTC") is reviewing allegations that Amazon misleads customers about the Company's pricing discounts. (NASDAQ:AMZN) is using deceptive list prices in its products.

Critics of Amazon's proposed purchase of Whole Foods, which is pending approval from regulators, are anxious that Amazon's alleged deceptive discounting practices might spill over.

"Amazon is focused on providing low prices, vast selection and convenience, including improved access to food and groceries", Amazon's Brian Huseman wrote. "We validate the reference prices provided by manufacturers, vendors, and sellers against actual prices recently found across Amazon and other retailers".

But if Amazon is successful in its plans to buy Whole Foods for $13.7 billion and continue growing into the world's only marketplace, does price competition even matter?

Additionally, a year ago Propublica, a nonprofit dedicated to investigative journalism, looked at 250 frequently purchased products over several weeks and found that around 75% of the time Amazon's own products and those of companies that buy Amazon's services were placed in its website's coveted "buy box".

"Amazon displayed reference prices on 46 percent of the products surveyed-a sharp increase from a similar sample taken just months before", Consumer Watchdog said in its report.

Feds Looking Into Allegations Amazon Misleads Customers
FTC investigating claims of misleading Amazon discounts

Are you really getting as good of a buy on Amazon as the website claims when it offers a "discounted" price?

Consumer Watchdog said the before-sale prices were the most misleading type of reference price used.

Amazon, meanwhile, said in the statement that Consumer Watchdog's conclusions are wrong.

First we had the e-commerce giant locked into a protracted battle with the FTC over unauthorized in-app purchases made by minors.

Consumer Watchdog, which analyzed 1,000 items sold on Amazon, said the retailer often employs "previous" prices, which it alleges are created to give the appearance of big discounts.

Amazon ran afoul of the FTC in 2014 for making it too easy for children to run up bills while playing games such as "Pet Shop Story" and "Ice Age Village" on mobile devices, resulting in an estimated $86 million of unauthorized charges.


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