The FTC Is Taking A Closer Look At How Amazon Discounts

As Amazon and Whole Foods roll toward the conclusion of their acquisition/merger, it seems the FTC is gearing up to take a look at Amazon’s discounting practices and whether or not they are on the level, legally speaking.

Specifically, the FTC will be investigating allegations that Amazon offers consumers misleading information on pricing discounts, according to sources talking to Reuters.

Advocacy group Consumer Watchdog — after an analysis of 1,000 products on Amazon’s site — alleges that Amazon’s reference prices (placed on about 46 percent of items) are misleadingly high about 61 percent of the time, meaning that Amazon had not sold the item at that highest listed price within the last 90 days. Consumer Watchdog wrote the FTC about this complaint in February — the organization reportedly made informal inquiries at the time.

Amazon has responded that CW’s initial study into their pricing is “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.”

Consumer Watchdog says that Amazon is misleading customers into believing they are getting better buys than they are — and requests that the group block Amazon’s acquisition of Whole Foods until such time as the deceptive pricing practices stop.

Both tasks — evaluating deceptive advertising and evaluating mergers — fall under the FTC’s umbrella of tasks, but as of yet they have offered no comment on the matter. FTC policy does explicitly bar firms from listing goods at a higher than actual price in an attempt to make the mark down look more impressive.

Amazon settled a similar allegation with Canada’s Competition Bureau in January with a C$1 million ($756,658.60) fine. This would not be Amazon’s first trip to the FTC principle’s office — in 2014 they clashed over whether or not Amazon had made it too easy for children to purchase games without their parent’s permission.  It has been ordered to reimburse parents for the charges.