Report: Amazon Still Promoting Phony Discounts

For years, Amazon has often used the “manufacturer’s suggested list price (MSRP)” as a reference price for many products to be able to claim that Amazon’s current selling price would save shoppers a huge sum of money. Savvy consumers know that very few items ever sell at full MSRP, so any savings claimed compared to that number are likely to be fictitious. We have previously shown you crazy examples where Amazon even used inflated reference prices to facilitate their 80% and 90% off claimed discounts in some cases.

Almost exactly a year ago, we reported that Amazon apparently had discovered consumer religion and was dropping many of its phony comparisons to list prices. The change was likely a result of several lawsuits about their deceptive pricing practices.

More recently, Consumer Watchdog, a California advocacy group, noticed that Amazon was now advertising discounts from “was” prices (such as “Was $49.99” “Now 39.99” “Save 20%”). Sometimes the comparison just showed a price with a line through it, without explanation of what that comparative price actually represented.

So, like any good consumer group, they decided to conduct a survey. In June, they checked 1,005 items to see if Amazon’s new way of making price comparisons was less deceptive than the old way. They used a website called The Tractor, which maintains price histories for items sold by Amazon. In this way, they could see if the claimed “was” price was ever really charged by Amazon. See their full report.

The key findings included:

  • Amazon displayed reference prices on 46 percent of the products surveyed.
  • 61 percent of all reference prices were higher than any observed price charged by Amazon in the recent past (defined as 90 days).
  • In nearly four in ten cases, Amazon never appeared to charge the previous price from which it claimed to be discounting. It was entirely fictitious.
  • 83 percent of crossed-out prices on sale items exceeded the highest historical price in Tractor’s records. On average, they were double the highest price Amazon had charged previously.
  • Here are some specific examples from their study:


    Hammermill paper

    According to the study, you really were not saving almost 50% on this paper. Rather than $17.78 being the regular price for this paper at Amazon just prior to the sale as some might believe, there were only four periods lasting no longer than a day or two when that was the actual price in the past year at Amazon. Neat trick, huh? As a matter of law in Massachusetts, for example, advertising regulations require that an item be offered at regular price for 14 consecutive days first before it is discounted. And then it needs to be at full regular price for about 36% of the time if the seller is going to continue to make a comparison to the “regular” price. (There are other rules that can apply here too.)


    Amazon leather bag

    There was only six months-worth of price history on this item, but during that time, the most that Amazon charged was $26 — nowhere near the crossed out price of $149.99.

    Federal Trade Commission guidelines state:

    “If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison…. If, on the other hand, the former price being advertised is not bona fide but fictitious – for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction – the “bargain” being advertised is a false one…”

    It is sad that a seller like Amazon, with its tens of millions of customers, seemingly continues to resort to using these deceptive pricing practices.

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    6 thoughts on “Report: Amazon Still Promoting Phony Discounts”

    1. Wholeheartedly, I agree the compare at prices are ridiculous, but sometimes those rules interfere with buying stuff for what you think the appropriate price should be. If i want something at Macy’s I have to make sure I shop on a Friday or Saturday when there usually is a “sale,” because otherwise those pants that are $28 go back up to $59. Just because they say $59 does not make one think they are that valuable. The material and quality would not warrant it so I have to wait and waste a weekend day instead. In my world list price is meaningless. I just wish stores and internet sites would stop playing those games of perceived vs. real value.

    2. I always do several price checks before buying anything from Amazon. Quite often I find prices lower than Amazon’s price.

    3. Compare prices are ridiculous, but they seem to work. If people do their research, they will learn that the time JC Penny decided to stop using compare prices was one of the darkest times in their retail history.

      Consumers like to see compare prices that make them feel special. In this case, I think Amazon is giving shoppers what they want.

      I don’t like it one bit, but consumers have spoken. I’d really like to see a retailer change the retail environment to one of honesty rather than deception.

    4. The problem with what JC Penny did is that they stopped having sales, but the regular prices were higher than the the old sale prices. For this to have worked, they would have had to offer the “sale” prices all of the time. As it was, I could see a pair of socks for $15 at JC Penny and then get a comparable item from Macy’s on sale for $10.

      The “we don’t do sales” model can work if your everyday prices are competitive. (This is more or less Walmart’s approach and the do well.) However, the logistics must not have been there for JC Penny to be competitive on every single item every day and still be profitable.

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