Why Amazon Just Updated Its Pricing Practices

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Woman shopping online
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Amazon has agreed to make its pricing practices more transparent after a group of California district attorneys sued the retail giant for allegedly misleading customers through its reference prices, Courthouse News Service reports.

Amazon also will pay $2 million in penalties, costs and restitution to California’s Consumer Protection Trust Fund as part of the lawsuit judgment, which was issued March 24 in San Diego Superior Court.

The retailer already has made changes to its website and its pricing algorithm per the judgment, according to the district attorneys’ announcement about the lawsuit outcome.

The prosecuting attorneys had contended that some of Amazon’s reference prices misled or potentially misled consumers, according to their announcement. These reference prices often are labeled as “List” or “Was” prices on Amazon’s website and are a way that the retailer advertises savings.

San Diego County District Attorney Summer Stephan said:

“When consumers shop online, they need to be able to trust that when a product is advertised as being a bargain, it truly is. This judgment should remind retailers that the law requires them to provide accurate information so consumers can make informed purchasing decisions.”

Specifically, the district attorneys took issue with how Amazon determined its reference prices and whether it was misleading to describe them as “list” or “was” prices, they said in their announcement.

Amazon already has made changes to its site, more thoroughly explaining how it computes “List” and “Was” prices and better disclosing that explanation.

According to Courthouse News Service:

“The agreement requires Amazon make changes and revisions to its ‘List’ and ‘Was’ pricing disclosures to explain the way it determines and validates its reference prices advertised on its website with a slash mark through the prices. Amazon must include a hyperlink to provide consumers clear definitions of ‘Was’ and ‘List’ price advertisements to explain the nature of the advertised savings.”

You now will see the word “Details” next to some reference prices on Amazon’s site, such as is circled in orange in this example:

An example of changes Amazon has made to its reference pricing practices
screenshot from Amazon.com / Money Talks News

Clicking on the word “Details” takes you to an Amazon webpage that currently is titled “Strike-Through Pricing and Savings,” where the retailer explains how it computes “List” and “Was” prices.

That explanation has been expanded significantly, as you can see from comparing the current webpage to this archived version of the page as it appeared in January, when it was titled “List Prices.”

For more Amazon shopping tips, check out “9 Mistakes Everyone Makes When Shopping on Amazon.”