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Amazon customers turn to FTC after pricing glitch

Consumers upset by Amazon.com's response to a recent pricing problem have taken their complaints to the Federal Trade Commission.

4 min read
Consumers upset by Amazon.com's response to a recent pricing glitch have taken their complaints to the Federal Trade Commission, and legal experts say they may have a legitimate case.

The glitch, which happened late last month, gave buyers deep discounts on dozens of items in Amazon's toy store. Amazon has since contacted customers who ordered the discounted goods, asking them to pay the regular price for the items or cancel their orders.

"I believe what they did falls under the category of deception," said J. MacDonald, a Massachusetts resident who declined to give her first name. MacDonald, who ordered three items during the glitch but did not receive them, is among those who have filed a complaint with the FTC.

"I feel deceived and would not shop from them again for the fear that they would tell me the price was different," she said yesterday.

Steve Sidener, a partner with Gold Bennett Cera and Sidener, a San Francisco-based law firm that specializes in consumer protection and class-action suits, said these Amazon customers raise legitimate questions about the situation. Not only could the FTC get involved, but consumers could argue that Amazon's actions are prohibited under state consumer-protection laws, Sidener said, especially those of California.

"What concerns me is Amazon told people what the real price was. That's potentially a bait-and-switch-type practice," said Sidener, whose firm is not involved in the complaints to the FTC.

Amazon representatives declined to comment.

Customer friendly?
FTC spokeswoman Claudia Bourne Farrell would not confirm whether the agency has received the complaints against Amazon.

Other agency representatives, who declined to be named, said Amazon's actions could fall under FTC guidelines prohibiting unfair and deceptive acts and practices. They said the FTC's standard response in such matters is to investigate the incidents to see whether they indicate a pattern of behavior by the company.

The complaints to the FTC come as Amazon's stock has fallen under the weight of investor concerns about its potential for profitability and its slowing revenue growth.

Amazon has traditionally described itself as a customer-friendly company that ignores short-term losses to improve customer service, but the company has begun to place a greater emphasis on cutting costs and improving its bottom line.

The fallout also comes as Amazon has kicked off an "end of summer" sale in its toy store this week, offering up to 50 percent off some products. But the new sale on toys has only added fuel to the fire of consumer discontent.

"Real" prices
Some consumers are upset that the "real" prices Amazon asked them to pay for items affected by the pricing glitch are far higher than the current sale prices for those items. One customer said Amazon asked her to pay $19.99 for a toy dump truck that she ordered at the glitch price of $3.49. Amazon now has the truck on sale for $9.99.

"I don't plan to shop there again," said Alysia Mumphrey of Sachsy, Texas, who ordered two Barbie dolls during the glitch but did not receive them. The dolls were listed at $7.49 each during the glitch but normally sell for $89.99.

"If I have to sit there and call and verify every price on the site, what's the use of doing it then?" said Mumphrey, who also filed a complaint with the FTC.

Other consumers expressed outrage that Amazon seemed to be sending some items to customers while asking others to cancel their orders. On message boards, such as those run by MyCoupons.com, consumers reported receiving erroneously discounted items even up until yesterday.

"Had Amazon done the right thing by canceling all the orders that fell under the pricing error, I would have no problem with them," said central Pennsylvania resident Sarah Liveringhouse, who took her complaint to the FTC after ordering and not receiving six items during the glitch. "Because they decided to ship orders and are still shipping orders to some and not others, they have lost my business."

Raises questions
The fact that Seattle-based Amazon has not been consistent in the way it has treated customers who placed orders during the glitch raises a "red flag," said Chris Jarvis, a spokesman for the consumer-protection division of the Washington state Attorney General's Office. "It does raise questions of how are some consumers treated preferentially in regards to others."

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Amazon's troubled waters
However, Jarvis said, his office has not received any consumer complaints about the glitch. Washington regulators cannot pursue a case against Amazon without such complaints.

Other experts questioned whether current consumer-protection laws do enough to protect online consumers. Courts have set few, if any, precedents to guide regulators, and laws designed to rein in the behavior of brick-and-mortar companies may not be applicable to e-tailers, experts said.

"In the brick-and-mortar world, there are laws that clearly apply to these cases," said Ed Mierzwinski, consumer program director for U.S. Public Information Resource Group. "The question is, How does a consumer get redress in the online environment?"

But Vergil Bushnell, an e-commerce policy analyst with the Consumer Project on Technology, said Amazon should be treated the same as any other retailer.

"When a retailer advertises a certain item at a certain price and refuses to allow consumers to consummate the purchase, the consumers have a legitimate complaint."