Weeks after its blockbuster acquisition of Whole Foods, Amazon is under FTC scrutiny for allegedly misleading customers about discount pricing. An investigation from the advocacy group Consumer Watchdog calls into question the legitimacy of the e-commerce giant’s reference prices, which are used to demonstrate money saved on a hypothetical purchase.
Basically, Consumer Watchdog is calling bullshit on Amazon’s reference prices, claiming that they’re used to simulate a bargain that doesn’t actually exist. Or, as the group explains: “Two Consumer Watchdog reports show that Amazon is deceiving its customers by putting fake crossed-out prices next to its products. It’s a deceptive marketing ploy meant to trick consumers into thinking they are getting a deal for the products they are purchasing when they are not.”
Consumer Watchdog surveyed 1,000 Amazon products in June, finding that 61% of reference prices were actually more expensive than what the products were sold for 90 days earlier. Forty-six percent of the products analyzed had a deceptive reference price, the study found. Consumer Watchdog wrote the FTC a letter detailing the alleged ruse, and the agency has made inquiries about the issue, reports Reuters.
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Predictably, Amazon clapped back against the allegations in a statement, writing: “We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.” The FTC’s alleged probe of Amazon’s deceptive price modeling shows that regulators might be concerned about the company's acquisition of Whole Foods for $13.7 billion last month. The agency is inclined to ferret out any similarly sneaky moves that Amazon might bring to the supermarket business, the report states.
This has happened before. As recently as March, Consumer Watchdog accused Amazon of peddling products with arbitrary reference prices meant to inspire belief in an artificial bargain. The problem then, critics argued, was that Amazon didn’t really explain how it determines the final list price of its goods. For consumer advocates, the issue definitely remains.
While everyone loves a price-slashing deal, it’s probably best to do a bit of comparing with other retailers before spending money on something that isn’t as cheap as it seems.
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