Think You’re Saving by Shopping on Amazon? Watchdog Group Says That’s a Lie

Amazon’s got some explaining to do.

If you’ve ever purchased anything on Amazon, you have probably seen what the retail giant calls the product’s “list price.” It is the crossed-out small, gray number that lets you know exactly how much you would pay if you were silly enough to shop anywhere other than Amazon.

To the left of the list price is another number. This one is smaller in value but twice as big and bold. It tells you how much you’ll save — and essentially tells you how smart and awesome you are for being such a savvy shopper.

Those numbers play a big role in convincing you to buy.

But a Consumer Watchdog study found that, more often than not, that list price is overinflated, which means if the study’s findings are true, Amazon’s purported savings are often a flat-out lie.

The Study’s Shocking Findings

To gather data for the study, the nonprofit advocacy group looked at 4,000 products on Amazon. Of the products included in the study, Consumer Watchdog found that 25% of them had a crossed-out higher list price.

According to the study, 40% of the time Amazon decides to add a list price, it is higher than the highest retail price at any of its competitors. What’s more, Amazon’s average list prices are about 20% higher than the median market price for any single item, the report claims.

“The majority of these crossed-out prices exceeded — sometimes by large margins — any plausible definition of the ‘plausible market price,’” John M. Simpson, Consumer Watchdog’s privacy project director, wrote in a petition filed Monday with the California Department of Justice.

The petition asks the state’s attorney general to investigate Amazon’s practices.

“The reference prices were an entirely bogus notional price that created the false impression that consumers were getting a deal when they were not,” Simpson wrote. “When correcting the inflated list prices, the fictitious discounts often vanished.”

Amazon Defends its List Prices

So what did Amazon have to say about all this?

It said the study — not its list prices — is what’s misleading.

“Manufacturers, vendors and sellers provide list prices, but our customers care about how the price they are paying compares to other retailers,” the company said in a statement sent to the Los Angeles Times. “We validate list prices against actual prices recently found across Amazon and other retailers, and we eliminate List Price when we believe it isn’t relevant to our customers.”

But Consumer Watchdog says the numbers tell a different story.

This Isn’t Amazon’s First Snafu Surrounding List Prices

This isn’t the first time the online retailer has been accused of using shady pricing tactics to get more customers to buy. In January, Amazon Canada agreed to pay CA$1 million (about $751,000) to Canada’s Competition Bureau after a two-year investigation found the company exaggerated customer savings.

From here, it will be up to the state of California to decide if Amazon has done anything wrong and, if so, whether it will have to pay up for its sins.

Your Turn: Will the questionable list prices on Amazon cause you to shop elsewhere?

Desiree Stennett is a staff writer at The Penny Hoarder. She doesn’t really shop online so she feels like she won this battle of Amazon vs. the world.