FTC Probing Accusations That Amazon Is Misleading On Discounts

(RTTNews) - The Federal Trade Commission is investigating allegations that Amazon.com Inc. (AMZN) misled consumers about its pricing discounts, Reuters reported, citing a source close to the probe.

The FTC probe is reportedly part of the agency's review of Amazon's proposed $13.4 billion deal to buy grocery chain Whole Foods Market Inc. (WFM).

According to the Reuters report, the complaint on Amazon was brought by advocacy group Consumer Watchdog after it looked at about 1,000 products on Amazon's website in June and discovered that Amazon put reference prices, or list prices, on only 46 percent of the products.

Consumer Watchdog said on its website that Amazon is deceiving its customers by putting fake crossed-out prices next to its products.

According to the advocacy group, Amazon's deceptive marketing ploy is meant to trick consumers into thinking they are getting a deal for the products they are purchasing when they are not.

"These bogus 'list prices' are not indicative of the market value of the product or competitors' prices or any price Amazon has charged," Consumer Watchdog said.

The advocacy group said its analysis found that 61 percent of all reference prices were higher than any observed price charged by Amazon in the recent past 90 days. It urged the FTC to block the Whole Foods deal unless Amazon formally commits to ending its deceptive pricing.

On July 6, Consumer Watchdog warned consumers about Amazon's deceptive pricing practices and said that the company's dubious behavior meant its big promotion should be called 'Slime Day,' and not "Prime Day."

The warning was based on two in-depth studies released by Consumer Watchdog of Amazon's pricing practices.

In response to Consumer Watchdog's study, Amazon reportedly told Reuters that the study was flawed and the conclusions reached by the advocacy group were flat out wrong.

The online retailing giant said it validates the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers.