Amazon accused of 'misleading pricing'

WASHINGTON • As part of its review of Amazon's agreement to buy Whole Foods, the US Federal Trade Commission (FTC) is looking into claims Amazon misleads customers about its pricing discounts, according to a source close to the inquiry.

The FTC is looking into a complaint brought by the advocacy 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 per cent of them.

An analysis found that in 61 per cent of products with reference prices, Amazon's reference prices were higher than that for the same product it had sold in the previous 90 days, Consumer Watchdog said in a letter to the FTC dated July 6.

Following receipt of the letter, the agency made informal inquiries about the allegations, according to a source.

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The FTC declined to comment. It was not known if it would open a formal probe into the allegations.

Amazon said in a statement that Consumer Watchdog's study was "deeply flawed". The conclusions reached "are flat out wrong", it said. "We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers."

The scrutiny of Amazon's pricing is an indication the FTC is taking a serious look at the e-commerce company's agreement to buy Whole Foods, a deal that critics say could give Amazon an unfair advantage.

Consumer Watchdog argued that the deceptive list prices make Amazon prices look like a bargain, and asked the FTC to stop Amazon from buying Whole Foods while the deceptive discounting is occurring.

Amazon said in June it would buy the premium grocer for US$13.7 billion (S$18.7 billion). Amazon in January settled similar allegations with Canada's Competition Bureau. It paid a fine of C$1 million (S$1.1 million) as part of the settlement.

Amazon closed slightly up on Thursday at US$1,028.70.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 22, 2017, with the headline 'Amazon accused of 'misleading pricing''. Print Edition | Subscribe