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FTC Examining Allegations of Misleading Amazon Prices

The Federal Trade Commission is looking into a complaint by the advocacy group Consumer Watchdog that Amazon.com AMZN misleads customers about its pricing discounts.

In June, Consumer Watchdog looked at 1,000 products on Amazon and found that the retail giant put reference prices on about 46% of them. The organization found that for 61% of products with a reference price, the reference price was actually higher than what Amazon had sold that product for in the previous 90 days.

Consumer Watchdog argues that this practice is deceptive and makes Amazon prices look like a better deal than they are. The organization has asked the FTC to stop Amazon from buying Whole Foods WFM until they stop listing deceptive reference prices.

“Amazon must not be allowed to expand these deceptive practices to a whole new pool of unsuspecting customers,” wrote John M. Simpson, Consumer Watchdog Privacy Project director, in a letter to the FTC earlier this month.

In response to these allegations, Amazon called Consumer Watchdog’s study “deeply flawed.”

“The conclusions the Consumer Watchdog group reached are flat out wrong,” Amazon said. “We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.”

The FTC works to investigate deceptive advertising practices and assesses company mergers to ensure they comply with antitrust laws. The commission’s “Guide Against Deceptive Pricing” is against using “inflated” reference prices in order to make a price look like a bargain.

The FTC will also review Amazon’s acquisition of Whole Foods and could potentially block the deal if the commission believes it would harm competition.

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