Amazon to refund $2.5 billion in Prime settlement
Amazon plans to refund millions of dollars after settling an FTC lawsuit over Prime membership and cancellation issues.
Amazon is facing a new lawsuit for allegedly misleading customers with fake deals during its popular Prime Day sale.
The proposed class action lawsuit, filed on September 22 in federal court in Washington state on behalf of two Amazon customers, alleges that Amazon Prime Day is “rife with false sales and misleading ‘percent off’ claims.”
The lawsuit accuses Amazon of using false list prices to calculate Prime Day discounts, misleading consumers into believing they were getting a better deal than they actually were. The complaint alleges that the “pre-discount” prices that Amazon displays next to sale items are inflated and do not reflect the actual amount the products were sold for in the lead-up to Prime Day, which is supposed to offer exclusive discounts.
Amazon has a disclaimer that says it displays list prices based on whether a customer has purchased an item at or above that price in the past 90 days, but the lawsuit alleges that the higher “pre-sale” prices do not comply with this 90-day rule. In some cases, Amazon may increase listing prices for a “very short” period, sometimes just one day, to make subsequent Prime Day discounts appear legitimate, the complaint says. In some cases, products were not sold at higher prices for 90 days or more.
“Amazon uses fake Prime Day percentage discounts offered under the extreme time pressure of the short Prime Day period to lure consumers into purchasing its products, and the tactic works,” the lawsuit states.
USA TODAY contacted Amazon on Thursday, October 16th, but did not receive a response.
In at least one case, customers actually paid more for ‘sale’ items, lawsuit says
The lawsuit points to several examples of this alleged deception, including the previous Prime Day event, which ran from July 8th to 11th.
In one example, a children’s tablet was advertised as having a 40% discount for Prime Day only, reducing the price from $119.99 to $72.18. However, the tablet was not listed at that price in the 90 days prior to its release. In fact, the lawsuit alleges, it sold for between $50 and $85 in the past 90 days, with a median price of about $72, meaning customers actually paid more than $20 more than the lowest “off-sale” price.
In another article, air fryers were listed for 40% off for Prime Day, dropping the price from $59.99 to $35.99. According to the complaint, Amazon not only failed to sell the air fryer at a higher price in the 90 days prior to the sale, but also failed to display that price a year in advance of the sale date.
In several cases outlined in the lawsuit, deals that were supposed to be exclusive to Prime Day were either deeper discounts than advertised or no discounts at all.
If the two customers involved in the lawsuit had known the product’s regular price and that the deal was not as advertised, they would not have purchased the product during the previous sale, the complaint alleges.
The lawsuit comes after a Substack newsletter called Popular Information published an article in July accusing Amazon of defrauding customers on Prime Day.
Amazon pays $2.5 million in separate lawsuit
Amazon has recently faced increased scrutiny over its advertising practices. In September, the retail giant agreed to pay a $2.5 billion settlement that the Federal Trade Commission (FTC) called “historic” after being accused of manipulating customers into signing up and maintaining Prime memberships.
As part of the settlement, Amazon will pay $1 billion in civil penalties and $1.5 billion in consumer relief to approximately 35 million affected customers. Some eligible customers will automatically receive up to $51 in relief, while others will need to file a claim, according to court documents.
