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Report suggests Amazon misled consumers on Prime Day

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Posted at 6:21 PM, Jul 25, 2017
and last updated 2017-07-25 21:21:10-04

A report by Fox Business suggests that Amazon may have jacked up its prices to make its Prime Day deals, and other specials, to mislead consumers. 

Amazon Prime Day, which was on July 11, marked Amazon's busiest day ever. The day resulted in more sales for the company than traditional top shopping days such as Black Friday and Cyber Monday. 

But how good were those deals?

Jason Jacobs, who is the founder of Remodeez, which is a company that specializes in non-toxic foot deodorizers, told Fox Business that the deals for his products were not really deals at all. Jacobs said that through an agreement with the internet retail giant, Amazon sets the price of his products. 

Jacobs gave an example of a product that Amazon has typically sold for $9.99 since before January.

“They showed the product at $15.42 and then exed it out to put ‘$9.99 for Amazon Prime Day.’ And on the (Prime Day), the (was) price was like $18.44. So, we put a support ticket in right away and I rallied some friends through social media to go to their complaint board and complain,” Jacobs told FOX Business. 

This potentially deceptive subject was the focus of a study by the group Consumer Watchdog. In its July 10 report, it found that 46 percent of the 1,005 Amazon products it sampled were on some sort of sale, which meant the purchase price was lower than a "was" or "list" price. Of the on-sale items Consumer Watchdog studied, 38 percent had a reference price that exceeded the maximum observed price charged by Amazon in the past. 

An example given by Consumer Watchdog was of a leather messenger bag. Consumer Watchdog claimed the item was always available for less than $26 from December 2016 to May 2017, but Amazon claimed the list price was $149.99.

An Amazon spokesperson told Fox Business that it disputed Consumer Watchdog's findings.

"The study issued by Consumer Watchdog is deeply flawed, based on incomplete data and improper assumptions," the statement read. "The conclusions the Consumer Watchdog group reached are flat out wrong. We validate the reference prices provided by manufacturers, vendors, and sellers against actual prices recently found across Amazon and other retailers."

According to Reuters, the Federal Trade Commission is looking into Consumer Watchdog's findings. 

Amazon is not the only major retailer accused of false markdowns. Kohl's, JCPenney, Sears and Macy's were all sued in 2016 by consumers who claimed they were offered products that misleadingly marked down. 

To read Fox Business' entire report, click here