A consumer interest group has taken complaints about Amazon’s advertised prices to the California Attorney General, demanding an investigation and saying the company is “ripping consumers off.”
The group, Consumer Watchdog, argued that prices sometimes shown as “list” or “was” above the current price — showing the savings by the buyer — are often bogus and much higher than what most other retailers are charging, according to a news release.
“Consumer Watchdog believes Amazon and its executives are cynically flouting the law to increase sales and profits,” wrote John Simpson of Consumer Watchdog in the petition. “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 Professional code’s rules around advertised values.
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California’s Attorney General declined to confirm or deny “any potential or ongoing investigation” into the Seattle-based e-commerce behemoth, but did note that it had filed an amicus brief in a 2010 case when California district attorneys sued Overstock.com over its comparison pricing.
In that case, a judge eventually ruled in 2014 that Overstock.com had to pay nearly $7 million in penalties for the faulty pricing. Overstock.com 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 emailed statement. “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 $1 million CAD from that country’s Competition Bureau over misleading prices.
In that case, the Canadian investigation found that Amazon didn’t confirm the list prices from its suppliers were accurate. Amazon made changes to how it shows pricing after the settlement, changes that went into effect at all Amazon sites, the Competition Bureau said in a January statement.
Another similar case was brought against Amazon in 2014 that was dismissed last year because Amazon pointed out that it’s conditions of use included an arbitration agreement
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 “the majority” of those “crossed-out prices” were above and beyond 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 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 in a statement. The “was” price is intended to to be an alternative to List Price.