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Amazon's Deceptive Discounting Being Probed By U.S.’s FTC

Amazon's Deceptive Discounting Being Probed By U.S.’s FTC
The Federal Trade Commission is looking into allegations that Amazon misleads customers about its pricing discounts as part of its review of Amazon's agreement to buy Whole Foods, reported the media citing a source reportedly close to the probe.
The advocacy group Consumer Watchdog found that Amazon put reference prices, or list prices, on about 46 percent of some 1,000 products on Amazon's website which the watchdog had looked at in June. Following this, the watchdog filed a complaint with the FTC resulting in the probe.
Consumer Watchdog said in a letter to the FTC dated July 6 that Amazon's reference prices were higher than it had sold the same product in the previous 90 days in 61 percent of products with listed with it and which had reference prices, found an analysis, said
According to a source who spoke to the media on background to preserve business relationships, the agency made informal inquiries about the allegations following receipt of the letter.
There were no comments by the FTC. Whether a formal probe into the allegations would be opened by the agency is not yet known. Amazon closed up slightly for the day at $1,028.70.
Consumer Watchdog's study was "deeply flawed", Amazon said in a statement.
"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."
An indication that the FTC is taking a serious look at the e-commerce company's agreement to buy Whole Foods is given out by the review of Amazon's discount pricing in this case. That deal with the Whole Foods is a deal that critics have bene saying could present Amazon an unfair competitive advantage in the market.  
Consumer Watchdog asked the FTC to stop Amazon from buying Whole Foods while the deceptive discounting is occurring because, it argued that, the deceptive list prices make Amazon prices look like a bargain.
On order to ensure they comply with antitrust law a dual role is played by the FTC by probing charges of deceptive advertising as well as making assessment of undue advantages arising from mergers. In June, the buying of the premium grocer for $13.7 billion was made by Amazon.
Warnings against using a "fictitious" or "inflated" list price for the purpose of making the price charged look like a bargain is issued with the FTC's "Guide Against Deceptive Pricing".
In January, similar allegations with Canada's Competition Bureau were settled by Amazon. As part of the settlement, it paid a fine of C$1 million ($756,658.60).
For making it too easy for children to run up bills while playing games such as "Pet Shop Story" and "Ice Age Village" on mobile devices, Amazon ran afoul of the FTC in 2014. This business model resulted in an estimated $86 million of unauthorized charges. For the charges, the company has been ordered to reimburse parents.

Christopher J. Mitchell

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