FTC Probing Allegations of Amazon's Deceptive Discounting (reuters.com)

An anonymous reader quotes a report from Reuters: As part of its review of Amazon's agreement to buy Whole Foods, the Federal Trade Commission is looking into allegations that Amazon misleads customers about its pricing discounts, according to a source close to the probe. The FTC is probing 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 percent of them. An analysis found that in 61 percent of products with reference prices, Amazon's reference prices were higher than it had sold the same product in the previous 90 days, Consumer Watchdog said in a letter to the FTC dated July 6. Amazon said in a statement that Consumer Watchdog's study was "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."

Comments

They do what every other retail store does...

[PablosBrain]

They do what every other retail store does for discounts.

Re:They do what every other retail store does...

[Anonymous Coward]

you ain't shitting any. the local grocery store chain does this in spades... ridiculous high "regular prices" published in ads that are way higher than the actual "shelf price" ever was... and when they do follow the "letter of the law", they mark up items, waaaay up, the week before a % off sale which ends up being close (and sometimes even still higher) to what the old shelf price was. fucking crooks, the whole lot of them. one thing is for certain, those bastards will never violate our state's minimum markup law (3-6 percent depending on sourcing.. wholesale or direct). their shenanigans allows walmart to price higher locally, too, and maintain a smaller selection than the store 30 miles away. ready for amazon to take over since we're too small a market to actually get brick-and-mortar competition.

Flat out something

[arth1]

"Prices found" does not equate to sales prices.
Some countries with actual consumer protection requires "before" prices to be a price that had multiple actual sales to unaffiliated entities, not just what it was announced at or sold internally at.
If I announce my fridge for sale for $50,000, and next week for $150, that's not a $49,850 discount.

Re:Flat out something

[bluefoxlucid]

Amazon usually shows list price with a strike-through, and then their price. Standard practice in the U.S. For some items, they show a stricken list price, a stricken retail price, and the current low-point price.

Re:Flat out something

[thegreatbob]

I've always worked with the 'list price' in any context as follows:

Is vendor selling it at list price? Don't buy from them.

Re:Flat out something

[xxxJonBoyxxx]

>> Some countries with actual consumer protection requires "before" prices to be a price that had multiple actual sales to unaffiliated entities, not just what it was announced at or sold internally at.

This is also the case in some US states. For example, Los Angeles has figured out how to use California law on advertised discounts to chase down major retailers:
http://www.latimes.com/business/la-fi-retailers-lawsuit-20161207-story.html

Given this announcement from FTC, I have to wonder if the 2016 round of unlawful discount litigation was just the preseason; now everything's in place for attorneys to tap directly into Amazon's revenue stream.

Re:Flat out something

[Solandri]

Basically it sounds like Consumer Watchdog wants Amazon to incorporate camelcamelcamel's price history directly into Amazon. While that would be convenient (I have the extension on my main browser, but not on every browser like my phone), I don't see why Amazon should be singled out with this requirement when no other store has to do it.

The tools are out there. It's up to the buyer to use them. Part of the free market is that people more concerned about saving money by cross-checking prices (poor people who take the time to research and inform themselves) end up paying lower prices. Their purchases are effectively subsidized by people who don't care about price (rich people) and people who are too lazy to do price comparisons before buying; these people pay the regular price and help stores make up their margins so they can hold sales that get the well-informed poor shoppers to buy.

If Consumer Watchdog gets their way and basically forces Amazon to give a price history of every item, the result is not going to be what they hope it will be. The end of a sale would then result in a drop-off in purchases as everyone realizes they just missed a sale, and decide not to buy just because of the price increase, not because they don't like the current price. Consequently, the only way for Amazon to maintain their margins will be to hold fewer discounts and sales. Their average price on an item will be the same, but the delta between high and low will become smaller - no more sales, just the occasional market price correction. Poor people (who do their price research) will on average end up paying more than they used to, rich and lazy people who didn't care and just one-click purchased will on average end up paying less than they used to.

Re:Flat out something

[arth1]

Basically it sounds like Consumer Watchdog wants Amazon to incorporate camelcamelcamel's price history directly into Amazon. While that would be convenient (I have the extension on my main browser, but not on every browser like my phone), I don't see why Amazon should be singled out with this requirement when no other store has to do it.

In some countries, Amazon has to do the equivalent. So they already have systems in place that are working.

So this boils down to an argument of "it's unfair if I can't be deceptive in the US when others can". I don't think that's a good argument, and that Amazon would be better off in the long run supporting that everybody should be held to high standards.

Re:Flat out something

[arth1]

Basically it sounds like Consumer Watchdog wants Amazon to incorporate camelcamelcamel's price history directly into Amazon. While that would be convenient (I have the extension on my main browser, but not on every browser like my phone), I don't see why Amazon should be singled out with this requirement when no other store has to do it.

That can still be gamed.
What if the CEOs of two stores in, say, Delaware, each have the store buy a thousand $3 fidget spinners at $30 from each other? When they then sell them for $9.99, reduced from $30, they take the $20.01 off as losses against the $27 gain from the first sale.

Re:Flat out something

[bluefoxlucid]

Best Buy tends to sell above MSRP. This was surreal when the price of a refrigerator I wanted was $1,300 refurbished, $2,200 new Home Depot, $3,000 MSRP, and $3,300 Best Buy.

Normal

[Mike Frett]

This is normal. During and after the Holidays, the so-called discounts are actually higher than on regular days. I live by the rule: Never buy discounted Items.

Re:Normal

[bluefoxlucid]

I keep hearing this from crazy people, and it keeps not being true. I've worked in retail, but that doesn't matter; what matters is I've actually looked at prices for things, piled up loads and loads of shit I wanted to buy but didn't want to go $4,000 into credit card debt for, and so have frequently been watching when the prices drop for holiday sales and other bullshit.

The truth is they think a $5 flash drive that actually costs $15 and usually retails for $20 will get you in the store to buy a $500 TV that actually costs $400 and is marked down from its typical price of $529.99. They're still operating on the same NOP margin (in retail, that's often like 5%-8%); they're using seasonal hype and a loss-leader model to induce you to buy more so they can profit by volume.

Re:Normal

[AmiMoJo]

It's best to use a service like CamelCamelCamel to view previous prices. They offer email notifications if a price drops below a threshold you set too, but be aware that they sell the thresholds you set to third parties. Not your email address or identity, just the threshold, so sometimes you will find that companies offer products at the exact price you wanted after setting one up.

Re:Normal

[magusxxx]

I think Mike is talking about what some major chains used to do with jewelry sales during Christmas. They'd have a pin for $100. They'd raise the price to $200. And then have a 50% off sale. In several states this is majorly illegal and considered fraud. The TV news program 20/20 did a piece on this back in the 1980's. A year later they did a follow-up and again the some of the same retailers were caught. Before this they were threatened with 'fines per discovery'. After this they were fined with 'fines per instance'. So if they sold 50 of them in one store, they'd be fined 50x not just once. Now with the internet we have this crap happening all over again.

Re:Normal

[drinkypoo]

Harbor Freight is in the middle of paying a settlement and is probably about to have to pay another settlement for their deceptive bullshit "compare to" prices, where they compare their shitty tools (some of which are still worth buying, mind you) to the MSRP of some Snap-On or Honda product which is provably better than their product in literally every way. And guess what? They're still doing it. I just found out about the settlement, there's two weeks to file, and I get ten bucks if I do. I probably will, just on principle. I don't know if I've actually been materially harmed by the practice, but it does annoy me every time I look at the ads because it makes it that much more difficult to find the items which are actually meaningfully discounted.

Amazon Prime

[pnutjam]

They should really investigate Amazon Prime, they advertise "free" shipping, but inflate prices to account for shipping.

Re:Amazon Prime

[beelsebob]

At least they're not quite as blatant as Walmart, who advertise free shipping, but offer you a $5 discount if you pick it up yourself.

Re:Amazon Prime

[Anonymous Coward]

They also "guarantee" two-day shipping, but often don't meet the guarantee. The customer's recourse when this happens is to have the price of their shipping refunded, which is $0.

Why stop (or start) here?

[rickb928]

The FTC could shut down virtually the entire retail furniture market. Instantly.

And that's not the only industry to examine in this manner. C'mon, man.

Do your research and decide your own value

[Tyr07]

You can't rely on corporate stores to tell you the proper worth and price for anything.

The proper price in the free market is whatever you can get someone to buy it for.

The source by circuit city literally had people put out sale prices that were higher than their normal prices.
You really have to learn to look at the quality of the product, if possible how many people use it, see if you can find actual reviews. Look for the problems and make a decision based on those reviews. Ultimately decide how much it's worth to /you/ to have it. Not buy it because you were told it's a good deal.

I believe it

[Malenx]

Every time I decided to buy something on Amazon, I first search for it on Google to compare prices.

A lot of the time, Amazon'z retail price is inflated over the going rate and their sale price is near actual retail.

I've probably saved a couple hundred dollars on some of my larger purchases doing that.

Re:Specific Example

[nedlohs]

It's almost as if when the supply of something goes down the price goes up. If only economists had realized this earlier...