As part of a review of Amazon.com, Inc. (NASDAQ: AMZN) deal to buy Whole Foods, the Federal Trade Commission is looking into allegations that Amazon misleads customers about pricing discounts according to a source.
The FTC is looking into the allegations after a group, Consumer Watchdog, looked into roughly 1,000 of Amazon’s products back in June on its website. Consumer Watchdog found that Amazon put reference prices on about 46 percent of the products.
Consumer Watchdog had argued that the deceptive prices on the site made Amazon prices look like a steal to consumers, which led the group to telling the FTC to prevent Amazon from buying Whole Foods while the company is engaging in deceptive discounting.
An analysis showed that in 61 percent of the products that had a reference price, Amazon’s reference prices were higher than it had sold the same product in the previous 90 days, Consumer Watchdog stated in a letter to the FTC.
Following the letter, the agency made informal inquiries about the supposed allegations.
The FTC declined to comment for this case.
Amazon then released a statement saying that Consumer Watchdog’s study was “deeply flawed”.
"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."
The review of the discount pricing by Amazon is leading the FTC to take a look into the agreement of the company to purchase Whole Foods, which many critics claim that it could give Amazon an unfair advantage.
The FTC’s “Guide Against Deceptive Pricing” warns against the use of “fictitious” or “inflated” reference price for the purpose of making the price look like a bargain to customers.
Previously, Amazon had settled similar allegations with Canada’s Competition Bureau back in January, as the company had to pay a fine of $756,658.60.
Amazon ran into a conflict previously with the FTC back in 2014 for supposedly making it too easy for children to purchase accessories while playing games on mobile platforms. This resulted in approximately $86 million of unauthorized charges and has been ordered to reimburse parents for the charges.