Amazon Agrees to Savings Claims Disclosures to Settle DAs’ Lawsuit
In March, a group of pro-consumer California district attorneys sued Amazon about misleading savings claims, and settled the case just one week later. Amazon agreed to pay a $2-million penalty. For decades, Amazon has advertised fictitious savings from bogus reference prices like “list prices” or “was” prices, making shoppers believe they were saving a bundle … Continued
In March, a group of pro-consumer California district attorneys sued Amazon about misleading savings claims, and settled the case just one week later. Amazon agreed to pay a $2-million penalty.
For decades, Amazon has advertised fictitious savings from bogus reference prices like “list prices” or “was” prices, making shoppers believe they were saving a bundle by buying from them. In 2017, we reported on a study that demonstrated Amazon was still up to its old tricks despite seemingly having found consumer religion the year before as a result of several lawsuits about their misleading savings claims.
As a current example, in late March 2021, Amazon advertised a Cuisinart hand mixer (HM-90S) for $79.95 — a claimed savings of 45% off the so-called “list price” $145.
But a quick check over at the manufacturer’s own website reveals that Cuisinart itself is selling this very model for the same $79.95, as are a host other big name retailers.
As of April 2, surprise, surprise, Amazon actually changed its advertising for this mixer and eliminated the misleading list price:
UPDATE: Eagle-eyed reader Kim W. visited Amazon on April 5, and discovered the company once again began advertising a savings of 45% for this mixer and it restored the same high list price albeit this time with a “details link” explaining how it was derived.
Under the terms of the just-announced settlement, Amazon is barred from using false or misleading reference prices, and it must include a hyperlink to a “clear and exact definition of the [reference] term” they used and a “statement that the List Price may not be the prevailing market price or regular retail price.”
Our view: Having Amazon tell customers that the reference price they display is not the real prevailing price in the marketplace does nothing to change the misleading nature of their list price savings claims. And it seems to violate the very California law that formed the basis of the DAs’ lawsuit against the company.
Bottom line: If the list price is not the price charged by a reasonable number of sellers, it should not be allowed to be used.
Edgar is a consumer lawyer who has authored a number of consumer protection laws, including the regulations under which the Massachusetts Lemon Law operates. He was formerly the Director of Consumer Education at the Massachusetts Executive Office of Consumer Affairs and Business Regulation in Boston. Edgar is a former Massachusetts Assistant Attorney General in consumer protection, and was a consumer education consultant for the Federal Trade Commission. He was also the consumer reporter for the then CBS television affiliate in Boston.