When you visit the largest online retailer Amazon, you might expect that you are getting good prices and that the discounts they advertise are good deals.
Unfortunately, as customers suspect from many online retailers, the so-called ‘sale’ prices Amazon offers are now being investigated by the Federal Trade Commission to determine whether the advertising giant deceptively marketed false prices to customers in order to increase profits.
“[A]dvocacy group Consumer Watchdog, which looked at some 1,000 products on Amazon’s website in June and found that Amazon put reference prices, or list prices, on about 46 percent of them.
An analysis found that in 61 percent of products with reference prices, Amazon’s reference prices were higher than it had sold the same product in the previous 90 days, Consumer Watchdog said in a letter to the FTC dated July 6.”
Consumer Watchdog alerted the FTC about the possible deception, and the FTC elected to investigate in light of Amazon’s intentions to purchase grocery chain Whole Foods. This is in addition to a basic investigation being conducted by the FTC to determine whether the merger between the two mammoth companies should be allowed.
Consumer Watchdog argues that Amazon inflated its listed prices by as much as 46 percent in order to fool customers into believing they are getting a better deal when they purchase at the discounted price. The group argues that this deceptive practice is ongoing, and that their conduct should cause the FTC to block the merger between Amazon and Whole Foods.
Amazon says that Consumer Watchdog’s claims are “flat out wrong.”
“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.”
This probe by the FTC is just the latest in a small string of legal woes faced by Amazon. As the company continues to grow in popularity and power, they will increasingly be under the microscope.