Amazon ‘ripping consumers off’ by tricking them into thinking they’re getting a deal: watchdog

On Amazon, the $119.99 price for the sleek and snazzy Cuisinart SS-10 single-serve coffeemaker looks to be a real steal, compared to the crossed-out price of $270 beside it.

And it turns out that a customer buying the coffeemaker on Amazon would be getting a deal – but nothing like the savings suggested by the $270 reference price, it appears.  Cuisinart itself sells the item for $149, and it’s available for that price at Kohl’s and Williams Sonoma.

This reference-price issue — which cost Amazon a hefty fine in Canada earlier this year — forms the basis of a demand March 20 by a consumer affairs watchdog that California’s Attorney General investigate Amazon over what the group claims is illegally deceptive advertising.

“This reference price creates the impression that the consumer is getting a deal because the price paid is substantially lower (than) the one with the line through it,” Consumer Watchdog said in a press release. “The catch is that the product is actually widely available from many other outlets at prices much lower than the crossed-out reference price.

“Amazon and its executives are cynically flouting the law to increase sales and profits. It’s false advertising violating the California Business and Professional Code, as well as an unfair and deceptive practice violating the Federal Trade Commission Act.”

Added the group’s Privacy Project director John Simpson, “Amazon CEO Jeff Bezos is building the company’s business on lies and unfairly ripping consumers off.”

Amazon, which refers to the reference prices as “list prices,” called Consumer Watchdog’s stated conclusions “misleading.”

“Manufacturers, vendors and sellers provide list prices,” Amazon said in a statement. “We validate list prices against actual prices recently found across Amazon and other retailers, and we eliminate List Price when we believe it isn’t relevant to our customers.”

Consumer Watchdog pointed out that Amazon was fined $1 million (Canadian – approximately US$750,000) in January in Canada over its use of the reference prices.

“At the heart of this case, it’s really about truth in advertising,” Josephine Palumbo of Canada’s Competition Bureau told the Toronto Star newspaper. “We know that savings claims are a powerful tool.”

Consumer Watchdog also noted that a California court in 2014 fined Amazon competitor Overstock $6.8 million for similar practices. Alameda County Superior Court found that Overstock.com displayed reference prices “based on the highest possible price in order to overstate the amount of savings consumers could get,” the Mercury News reported at the time.

The consumer group wants California Attorney General Xavier Becerra “to take immediate action to hold Amazon and its CEO Jeff Bezos accountable for this outrageous abuse,” it said in a petition sent to Becerra.

“Under state and federal laws, reference prices displayed by retailers must reflect the recent prevailing market price,” the petition said.

“Federal regulations state that it is insufficient to display a manufacturer’s suggested price or to cherry-pick the highest competitor’s price in choosing a reference price.

“Instead, a reference price must reflect the price at which a product is generally sold.”

Consumer Watchdog is also asking the Federal Trade Commission to investigate and take action on Amazon’s reference prices.

The Cuisinart coffee maker’s pricing and reference pricing on Amazon and elsewhere may shed some light on how Amazon arrives at the reference prices. While Kohl’s advertises a $179.99 “regular price” for the item it’s selling for $149.95, Williams Sonoma, also selling the appliance for $149.95, has a “suggested price” of $270, the same figure used by Amazon for a reference.

Consumer Watchdog said that in the past, nearly every Amazon ad had reference prices, but an early-February study by a data researcher of more than 4,000 products still found them on more than a quarter of ads studied, the group said. “The majority of these crossed-out prices exceeded — sometimes by large margins — any plausible definition of the ‘prevailing market price,'” Consumer Watchdog said.

 

 

Photo: Boxes travel down a conveyor belt in Amazon’s warehouse in Tracy in 2016. (Doug Duran/Bay Area News Group)

 

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  • saimin

    Boycott Amazon!

  • Brad R Dezirt

    Don’t pay attention to the listed savings price with any retailer. Do your effen homework and know your product and its market value.

  • CM

    This has been going on since Amazon started, and NOW its news?

  • Marathon-Youth

    Tricking people to buy is an old practice. that “9.99” usually gives an illusion the item is actually 9 plus dollars and not 10 dollars. That trick goes back decades.

    “special sales days” during the year usually means that the store has already marked up the item then slashed it by some percent. The customer is deceived by both the hype of a “sales day” and the so called “marked down” sales price at the store.

    reminds me of Neiman Marcus aka “Needless Markup”, that expensive store where the brand of the store on the bag is more the product than the item in the bag. Same goes for Gucci.

  • altizar

    “This reference price creates the impression that the consumer is getting a deal because the price paid is substantially lower (than)” But people are getting a deal because the price is still substantially lower than what other places is selling it for. 30$ is a substantial discount. What’s the MSRP?

  • Amazon is like anywhere else. You have tounderstand that they are NOT there to do you good, but to earn as much profit as possible,

    Caveat Emptor: compare prices! Look at CostCo, EBay and Lowe’s before you make any big purchases.

    Be VERY careful of foreign sellers as well. Although Amazon takes your money, they can make it hard to get a refund when a seller gives you a fake delivery date and a false tracking number.

    • taco

      This happened to me once, but Amazon refunded my money within 1 hour of me notifying them.

      • opinionated_too

        I bought an item from Amazon a few years ago. Within 2 hours, my credit card was compromised. I had to cancel it. The bogus purchase came from Amazon.

  • Guy LeDouche

    So…in that example…people are upset that they only got a $30 deal instead of a $150 deal. You can say the thing cost $1,000 elsewhere…all I care about is that I am paying the least.

  • John Doe II

    Newsflash amazin is typically not the cheapest. But they are convenient. If you want to save money use a price comparison tool.

  • Ima Knut

    I like the supposed free shipping also. They just add the shipping to the cost. If you look at other suppliers that add shipping, the cost is actually the same. Plus you have to spend the minimum amount. Joke.

  • Selim Yalvac

    Never buy anything on Amazon without a simple price check. Amazon is NOT the cheapest retailer anymore. In fact 90+% of the time I find it cheaper someplace else. Furthermore by advertising other buying options with shipping charges they defer the shipment cost to their Prime members. Soon being a prime member will be worthless as about half the time I pay shipping charges because the item is available somewhere else at a lower price.

    • xor

      Agreed – Yesterday I was shopping for black ink for my printer. Amazon was asking the full list price for all three sizes of cartridges that are available. Walmart was the only seller that was discounting and it was only by two cents for two of the sizes and a decent $4.80 off on the largest.

      We dropped our Amazon Prime membership as you can still get free shipping with more planning and a willingness to wait a week from click to delivery.

      • Cristobaldelicia

        Bad example: because for nearly every big brand ink cartridge, Amazon sells no name/ generic cartridges for a few dollars each (or less). If you just want to compare brand name cartridges, I’m sure what you say is true, but I get ink so low, that I can afford to throw away a couple of bad cartridges from a no-name and still pay less. Actually it’s a bad comparison for a number of reasons. Why would you use that out of the thousands of items Amazon sells?

        • Selim Yalvac

          I agree with ink but other generic items are usually a piece of crap. I had an Oral B electric tooth brush. If I remember correctly 4 generic replacement brushes, of course made in China, were $5.99 and each lasted one week; the bristles fell off. I bought an iPhone charging cable which was not original. It came from Hong Kong and never worked.

        • opinionated_too

          If you’re still using an inkjet printer, after the second set of ink cartridges, it’s cheaper to buy a whole new printer.

    • Cristobaldelicia

      No. I save a LOT with shipping charges, making a purchase at least once a week. Amazon is actually losing money with Prime members. And I’d be curious what items you’re buying that can be 90% of the time cheaper somewhere else. And how can you blame Amazon for the shipping charges other places charge? Are you not including these shipping charges in your price comparisons? I think maybe you’re making poor shopping decisions.

      • Selim Yalvac

        I make more than 5-7 purchases a week but I found out that the following rules apply: (1) Most big ticket items are cheaper elsewhere. For instance I bought 2 desk chairs in the past three years from Amazon, both made in China. The first one was inexpensive and it did not last for 2 years, my bad. The second one was a $345 chair of better quality but is not comfortable. So I ended up buying a $1300 leather chair on sale from a local furniture store after trying the chair. Morale of the story: do not buy large ticket items without seeing or items difficult to return; (2) I lately use Honey for price check and then run an internet price check before I buy anything on Amazon. The last item I checked yesterday was a set of 6 replacement tooth brushes for Phillips Sonicare e-series, $54.95 at Jet.com (free shipping), $59.99 at Amazon prime. Many books and DVD’s are cheaper at alternative vendors even after paying $3.99 for shipping. So check prices at More Buying Choices when you can, (3) If you do not need something immediately wait for a sale and buy locally (I live in Texas so I do pay sales taxes an most things I buy at Amazon); (4) Many specialty items are either not available on prime or cheaper if you pay shipping (such as some pesticides and nutritional supplements). (5) Text books are always cheaper at More Buying Choices. I can make the list go on and on but I really have to sit down and figure out on how many items I purchased that I needed for 2 day delivery and whether I would have saved money if I did not have Prime. By the way I never use Prime music or video as I have Netflix and 7000 CD DVD collection.

  • NMBill

    Pays to shop around. Amazing, that some don’t grasp that simple concept.

  • Bill Tobey

    OK I will buy that what Amazon is doing is wrong but the headline states-

    Amazon ‘ripping consumers off’ by tricking them into thinking they’re getting a deal: watchdog

    Hmm, what happened to “buyer beware”

    I’m an adult, it is my responsibility if I choose to accept it to shop wisely.

    • Cristobaldelicia

      Although, if you want to nitpick like that, it is “Consumer Watchdog” that said that Amazon was ripping people off, which is why it’s in quotations. Siliconbeat is just reporting what another group said. So, as an adult it’s your responsibility to detect whether a headline is saying something or just quoting someone else, if you choose to read wisely.

  • xor

    I’d always assumed the crossed out price is the manufacturer’s list price.

    I don’t think Amazon uses the highest asking price as sometimes you’ll see a scammer pulling a fast one by advertising an item at more than the list price and often times much more than the prevailing price. Yesterday I was checking print cartridge prices and found a marketplace seller on Walmart asking $93.78 for a cartridge that’s available from HP itself for $65.99. Oddly, no sellers on Amazon had that specific cartridge.

    • opinionated_too

      I had the same issue. I did a tiny bit of research and found an HP compatible toner cartridge for $17.50 plus $4.00 shipping. So far, I’ve printed no less than 1000 pages without a hiccough.

  • Serg P

    Let me get this straight, Amazon sells a coffee maker for $120 while Kohls and Williams Sonoma sell it for $150 (plus the time, gas and sitting in traffic to go to the store). But Amazon is ripping us off?

    If the MSRP is crossed-out, the price was probably also dropped by other retailers. If you are being ripped off is because you are too lazy to shop around (not too hard if you already have an internet connection).

    • Mike Douglas

      The point is that you are deceived into thinking that $270 is the cheapest you can get it somewhere else.

      You are correct that only the lazy wouldn’t do more research, but it’s still false advertising.

      • Serg P

        I’d say using the MSRP (which could be the price it had years ago) is very misleading, but not false advertisement or a rip off.

  • AngryNewYorker

    Class Action Lawsuit in 3… 2… 1…

    • You signed away your right to a class action the moment you signed into your Amazon account.

      “We each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action.”

      It actually isn’t uncommon for most companies to do similar terms.

      • Cristobaldelicia

        I’m not sure that contract would hold up in many states/districts. Same as software agreements that we so often click on.They aren’t necessarily legally binding and constitute a kind of scam in themselves. Certainly minors, for example, can agree to any contract, sign on the dotted lines, and not be held to account (medical services are actually an exception to this). There are all sorts of other examples.

        • For one, don’t put the burden of proof on me. I’ll let it slide this time as I am curious myself.

          Anyways, the Supreme Court in AT&T Mobility v. Concepcion held that class actions waivers are enforceable. The Federal Arbitration Act (FAA) applies to states as well as federal. So, any previous holdings from California et. al. are overturned.

          “Section 2 of the Federal Arbitration Act (FAA) makes agreements to arbitrate ‘valid, irrevocable, and enforce-able, save upon such grounds as exist at law or in equity for the revocation of any contract.'”

          “California’s Discover Bank rule is preempted by the FAA.The judgment of the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.”

          Check out the legal proceeding of AT&T Mobility v. Concepcion here. https://www.employmentclassactionreport.com/wp-content/uploads/sites/8/2011/04/ATT-Mobility-v.-Concepcion.pdf

  • EllaFino

    Don’t most people use Amazon because of their shipping and product availability. I don’t think price is the selling point as Walmart, Target etc pretty much match them.

    • Cristobaldelicia

      Actually it’s the Ratings that really get me. I can’t compare brands in the store on anything but price. On Amazon I can read reviews. They may not be reliable and plenty of companies try to game the system, but it beats the information-free zones in retail stores. I’d go to Walmart if an item is cheap or require refrigeration (Amazon is no good for yogurt). One is less than a mile from me, but often it’s not cheaper. The Kirkland brand is sold on Amazon as well as Walmart and Costco. Drug stores like Walmart also tend to be cheaper for bathroom cabinet type items, but often I need an extra item to get to $25 required for Prime free shipping…

      • Selim Yalvac

        Kirkland brand is a Costco brand and Amazon prices are usually 50% or 2X higher than Costco.

  • ePoch 270

    Why isn’t the article titled “Retailers, including Amazon and Williams Sonoma, ripping customers off”? Considering that WS is doing the exact same thing.

  • Savvy shoppers are smart enough to look at actual prices and compare them and not the “MSRP”.

  • charlie hustle

    I bet these people think they’re raising hell

  • Cristobaldelicia

    I’m divided because nowadays the “list price” can be ignored everywhere. The places that keep to the “manufacturer suggested retail price” are all going out of business these days, only giant “discount” stores are left (like Walmart). I’ve never paid any attention the crossed out prices on Amazon. On the other hand just because “everyone else does it” should not be an excuse and it would be good to make an example of the biggest retailer of them all (I’m guessing Amazon is bigger than Walmart). They should get at least a slap on the wrist and incentive to stop doing it.The fact that Canada does it and US does not does not speak well of America. It’s like America has become “the land of deception.”

    • Selim Yalvac

      Amazon is not even close to Walmart in size. Walmart sales $485.87B, Amazon 135.99B. I hope you are checking your prices more carefully.

      • Raptor Gilbert

        Are we talking retail stores then yes but if you mean the online side then no amazon destroys every online retailer.

        • opinionated_too

          Not by a LOOOOOONG shot!

  • Fear_and_loathing_in_CA

    Why is this a complaint?

    How hard is it to look up an item on 3-4 websites on your own and price compare? And if you go with the first and only price you see to make your decision, you deserve to be separated from your money.

    There will be no sympathy from me.

  • Gordon Westcoast

    These must be the same people who are attracted to 50% off sales where the pre-sale price is increased by 40%.

  • Jim Carter

    Give us credit for being bright enough to compare the ACTUAL price with ACTUAL prices from competitors. I never even glance at the crossed out prices. I DO save a small fortune each year by shopping Amazon.

  • No Future In Frontin

    Not to mention they sell used textbooks even though one has chosen the new option and pays the new price.

  • opinionated_too

    Amazon had a product for $18.50 plus $12.25 shipping. I went to their supplier’s website and I got 2 for $11.00 with free shipping. It seems like Amazon finds items wherever they can and they just act the part of a sales broker. You give them the order and they will have it shipped to them and they in turn, send it to you.

 
 
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