Amazon’s $13.7 billion purchase of Whole Foods should be put on hold until Amazon ends its “deceptive pricing practices,” a consumer group has demanded in a complaint to federal regulators.
Consumer Watchdog claims the e-commerce giant uses inflated “reference prices” next to real prices on product ads, misleading online shoppers into thinking they’re looking at a better deal than what’s actually on offer.
The reference prices “have no basis in reality,” Consumer Watchdog charged in its July 6 letter to the Federal Trade Commission and Department of Justice.
“Amazon is not competing on the basis of price in a way that would benefit consumers. Rather, it is competing deceptively by claiming a discount from an entirely bogus price,” the group claimed.
“In nearly four in 10 cases, Amazon never appeared to charge the previous price from which it claimed to be discounting.”
Amazon called Consumer Watchdog’s complaint “misleading.”
“We are obsessed with maintaining customer trust, and work hard to provide meaningful reference prices,” a company spokesperson said.
“We use a variety of systems to validate reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.”
The Whole Foods deal would extend Amazon’s reach, potentially allowing it to extend its pricing methods — and the company can’t be trusted, the group suggested.
“Amazon must not be allowed to expand these deceptive practices to a whole new pool of unsuspecting customers,” the letter to regulators said.
“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.”
This is the second run Consumer Watchdog has taken at Amazon over the allegedly misleading prices. In March, it asked California’s Attorney General, along with the FTC, to probe the firm’s pricing practices. That demand followed a $1 million fine against Amazon by Canada over Amazon’s use of reference prices.
Photo: Packages travel down a conveyor belt before being scanned and a shipping address is attached at the Amazon fulfillment center in Tracy in 2016. (Doug Duran/Bay Area News Group)
Tags: amazon, Consumer Watchdog, deceptive pricing, Department of Justice, DOJ, e-commerce, Federal Trade Commission, FTC, reference prices, shopping