FTC said to open probe into Amazon's pricing practices

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A consumer group charges the company lists exaggerated discounts

Critics have already expressed their displeasure with Amazon’s bid to purchase Whole Foods on antitrust and labor grounds, and now reports say the Federal Trade Commission (FTC) may be looking at the company's pricing strategies. 

Citing an unnamed source, Reuters reports that the agency is looking into allegations that Amazon routinely misleads its customers with its discounted list prices. The initial complaint was originally filed by consumer advocacy group Consumer Watchdog. It states that Amazon posts reference prices for certain discounted products that were actually sold at a lower price in the last 90 days. Amazon denies the allegations. 

If true, the practice would violate the FTC’s “Guide Against Deceptive Pricing,” which warns against using “fictitious” or “inflated” list prices in order to make price charges look like a bargain.

These alleged practices present a problem, Consumer Watchdog argues, because they could have serious repercussions on the retail food industry and the prices that consumers pay for groceries if the Whole Foods acquisition goes through.

“This deal, if it allows unfair and deceptive pricing to go forward, is not promoting price competition. It’s promoting unfair and deceptive pricing,” said Consumer Watchdog’s John M. Simpson.

Not a deal

Consumer Watchdog first reported the supposed problems with Amazon’s reference prices back at the beginning of the month after looking at over 1,000 products on the company’s site. In a letter to the FTC, the advocacy group said that around 61% of the products that had a reference price were being sold for a higher amount than they had been in the previous 90 days.

The goal of this alleged deceptive pricing, the group says, is to make it seem to consumers like they are getting a deal when they are actually paying more. It wouldn’t be the first time that Amazon has faced such allegations, as it settled similar charges back in January with Canada’s Competition Bureau.

The FTC does not comment on pending investigations and has not confirmed that it is actually investigating Amazon. For its part, Amazon has called Consumer Watchdog’s research “deeply flawed” and its conclusions “flat out wrong.”

“We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers,” the company said.

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