FTC Investigating Deceptive Discounting By Amazon

Amazon’s merger with Whole Foods could brew fresh trouble for the e-commerce giant. According to Reuters, the FTC is currently investigations allegations of misleading discounts on Amazon. Advocacy group Consumer Watchdog filed a complaint with the FTC regarding misleading prices and discounts on the websites.

Amazon

Consumer Watchdog Calls Foul

 

The consumer advocacy group analyzed 1,000 products over a period of 90 days on Amazon. They found that the list price of a product increased on the websites 61 percent of the times. This means that consumers were getting fake data on how much money they were able to save on a product. Amazon manipulated the prices of the product to show that consumers are getting a better deal.

Amazon could be disregarding the ‘Guide against Deceptive Pricing’ rules set by the FTC. This guide warns against the use of inflated or ‘fictitious’ prices to make the consumers believe that they are getting a great deal.

To understand this quickly, take the example of a product listed at $100 and being sold for $80. Amazon would like to sell the same product for $80 but it increased the list price to $120 to show consumers that they are saving double the amount. Consumer Watchdog’s complaints cite similar cases of products listed on the website. After the complaint was lodged, the FTC immediately began an informal inquiry into Amazon. It will form a part of the Whole Foods acquisition inquiry.

Anticompetitive Behavior

 

Lawmakers are also concerned about Amazon and Whole Foods merger. Republic David Cicilline and Senator Cory Booker have voiced their concerns over the matter. They have warned that the deal should be closely scrutinized as it could spark anti-competitive behavior. The potential impact on jobs was also discussed by the two. However, neither spoke about price manipulations.

However, Amazon thinks otherwise. In a statement, it said, “The conclusions the Consumer Watchdog group reached are flat out wrong. We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.” The company believes that the study conducted by Consumer Watchdog is ‘deeply flawed’.

A debate has ensued following Amazon’s announcement to acquire Whole Foods. While many are calling this anti competitive behavior, others are hopeful for Amazon’s ever-growing list of services. The FTC has declined to comment on the statement. It looks serious about handling complaints regarding deceptive prices but has not launched a formal inquiry yet.