Amazon.com settled a lawsuit with Riverside County and five other counties over pricing irregularities, it was announced Thursday, agreeing to pay $2 million in penalties and restitution, as well as change its online listings to eliminate confusion about the actual cost of products.
The consumer protection suit was initiated after an investigation revealed transparency issues associated with what is known as the “advertised reference price” on which the e-tailing giant has relied to list prices on its website, according to the Riverside County District Attorney’s Office.
District attorneys offices from Alameda, Santa Clara, Santa Cruz, San Diego and Yolo counties joined in the civil action, which was filed in San Diego.
According to Riverside County prosecutors, Amazon’s advertised prices were often misleading or potentially misleading because they included “Was” or “List” prices that routinely had strike-through lines across them, next to which were the current actual prices of the items, with no clear explanation of what the inapplicable prices represented.
“A `Was’ price is the price at which Amazon previously offered the product. `List’ price advertisements suggest to consumers the price at which the product is commonly offered or sold by another seller, supplier or the product’s manufacturer,” according to a Riverside County DA’s Office statement.
“The district attorneys determined that there were issues with how Amazon determined these reference prices and whether words like `Was’ or `List’ were used in a manner misleading to consumers.”
When notified of the lawsuit, Amazon worked to rectify the problem without delay, according to prosecutors.
“Amazon has always provided clear and accurate pricing information on our product pages, and we have made improvements to how we describe the pricing information we provide to make it even clearer for customers,” the company said in a statement.
Amazon included a link that elaborates on reference pricing at http://www.amazon.com/gp/help/customer/display.html?nodeId=GQ6B6RH72AX8D2TD.
As part of the legal settlement, Amazon.com will now hyperlink all “Was” and “List” prices, offering specific definitions for transparency, provided consumers click on the links, according to court papers.
Riverside County, which was designated processor of all settlement funds, will receive about $317,000 as part of the agreement, which was certified Wednesday by San Diego County Superior Court Judge Katherine Bacal.
She directed that $100,000 be deposited into the California Consumer Protection Trust Fund, while the remaining settlement money be divided equally among the other plaintiffs.
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