FTC Investigating Amazon's Discount Pricing Policy

FTC Investigating Amazon's Discount Pricing Policy

The Federal Trade Commission (FTC) is looking into allegations that Amazon has misled its customers with its discount-pricing policies. The FTC is reviewing Amazon’s proposed $13.7 billion acquisition of American supermarket chain Whole Foods.

The FTC is probing a complaint brought by the advocacy group Consumer Watchdog, which examined 1,000 products on the retailer's website and concluded 61% with list prices were overpriced. It found that Amazon put reference prices, or list prices, on about 46 percent of its products. The reference prices were more expensive than it had sold the same product for in the previous 90 days.

“Amazon must not be allowed to expand these deceptive practices to a whole new pool of unsuspecting customers. We call on you to block the proposed purchase of Whole Foods until Amazon formally consents to stop its deceptive, unfair and anti-competitive pricing,” John M. Simpson, Consumer Watchdog Privacy Project director, wrote in a letter to the FTC’s Bureau of Competition.

However, the retail giant has responded by saying the Consumer Watchdog's report was "flat out wrong."

“The study issued by Consumer Watchdog is deeply flawed, based on incomplete data and improper assumptions," the company said in a statement.  "We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers."

This is not the first time Amazon has run afoul of the FTC. In 2014, it was ordered to reimburse parents for an estimated $86 million of unauthorized charges stemming from children playing games like "Pet Shop Story" and "Ice Age Village" on mobile devices. More recently, the company settled similar allegations with Canada's Competition Bureau, which resulted in a fine of C$1 million ($756,658.60).

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