June%2017%

Amazon’s New Consumer Deception

Under legal pressure, online retailer abandoned deceptive “list prices” in favor of previous

prices. But those are at least as misleading.

A new survey of Amazon’s prices shows the retailer routinely uses inflated and fictitious

The company has long argued that antitrust enforcers should not worry about its growing

dominance across many sectors of the economy because it is a boon for consumers and lowers

prices. However, its misleading pricing practices suggest otherwise, and are coming under closer

scrutiny as it plans to introduce those into a growing number of bricks-and-mortar stores.

Amazon’s newest deceptive practice appears to have been introduced as regulators and consumer

lawsuits closed-in on its previous questionable practices. For years, Amazon displayed a “list

price” next to its own price to highlight the supposed discounts on offer. However, the retailer

quietly moved to eliminate list prices after criticism that they were deceptive and failed to reflect

inflated list prices by Amazon in the U.S.

eliminated list prices when it believed they weren’t “relevant to our customers.” In those cases,

the company said it had “introduced a ‘Was’ price to provide customers with an alternative

reference price when we don’t display List Price.”

This follow-on study of 1,000 products on Amazon.com was conducted in June 2017 to

determine if Amazon’s new practice was less deceptive than its prior ones. It found that

Amazon’s historical references prices were at least as deceptive as the list prices they replaced—

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• Amazon inflated its reference prices by a significant amount. On average, they exceeded

• More than 62 percent of Amazon’s “was” prices exceeded the maximum price observed

• By contrast, strikethrough prices were found to be highly reliable. All prices with just a

• Overall, the findings suggest that Amazon continues to flout Federal Trade Commission

deceptive to consumers, to avoid losing sales.

Antitrust enforcers should investigate Amazon’s opaque pricing strategies as part of their review

of its proposed acquisition of Whole Foods Markets. Amazon’s shifting practices, as well as its

explanations for how it arrives at its reference prices—suggests that regulators cannot take the

company’s assurances at face value or allow it to police itself. Antitrust enforcers must tackle

Amazon’s current pattern of harm to consumers before allowing it to expand its grip over their

everyday lives by purchasing more retailers. As a precondition for allowing its merger,

regulators must require that Amazon to make a legally-binding commitment to halt its deceptive

practices and establish a rigorous monitoring system to ensure it complies.

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past are all “fictitious” and not permissible under the law.

Some states have gone beyond the federal regulations to set specific guidelines for reference

prices. A former price must refer to the actual price at which a product was sold within the past

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sale price by an average of 70 percent, or $17.34.

However, both the FTC guidelines and Amazon’s own description of its practices state that the

retailer must have charged a previous price in the “recent past”—not just at any time in history.

The proportion of previous prices listed by Amazon that were not charged by the retailer in the

past 90 days (California’s definition of “recent past”) was far higher. (See page 10 for a fuller

discussion of Recent Prices.)

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“Was prices,” which Amazon claims are derived from the recent price history of the product on

before dropping it again to the regularly-offered “sale” price. This, too, is deemed to be

deceptive by the FTC.

The FTC states that former prices must reflect the sale price “for a reasonably substantial period

of time,” and that retailers who inflate prices for only a few days in order to offer a bargain are

acting in bad faith.

For example, Amazon advertised a “was” price of $17.78 on a box of printer paper that it sold

for $9.29. Price history from CamelCamelCamel, a similar service to Tracktor, showed that