Amazon.com Inc. has been hit with a class action lawsuit accusing the company of encouraging third-party vendors to raise the prices of their products by the amount they would have charged for shipping, tricking customers into believing they were receiving free shipping.
In his class action lawsuit, plaintiff Cemal Ekin says he paid $79 per year for an Amazon Prime membership mainly for the promise of free shipping. However, he says that third-party vendors are told to raise their prices to cover shipping costs, causing Prime members to pay inflated prices for products despite Amazon’s free shipping guarantee.
According to the class action lawsuit, Fulfillment by Amazon (FBA) is a service Amazon offers to third-party vendors. In return for fees paid by the vendors, Amazon warehouses products, fills orders, collects payments, ships orders, handles returns and provides customer service for goods owned by third parties that are sold on Amazon.com.
Ekin says Amazon encourages FBA vendors to list items for sale as Prime Eligible. However, “Amazon advised FBA Vendors to include the amount they would have charged for shipping in their item prices in order to maximize total revenue and profit margins,” Ekin alleges in his class action lawsuit. “Amazon disguised this price increase by giving priority to FBA Vendors, showing their items first in the results of a Prime Member’s product search.”
Ekin argues that Amazon’s practice breaches its contract with Prime members and is contrary to Federal Trade Commission (FTC) guidelines. According to the class action lawsuit, the FTC’s definition of “free” explains that “a purchaser has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise or service by marking up the price of the article which must be purchased.”
Prior to February 2011, Ekin says the sole benefit of having an Amazon Prime account was guaranteed free shipping on all orders. He filed the class action lawsuit on behalf of himself and all U.S. residents who became Amazon Prime members at any time from Oct. 24, 2007 and Feb. 22, 2011, and paid one or more $79 annual Prime membership fees during this period.
The class action lawsuit accuses Amazon of breach of contract and violations of the Washington Consumer Protection Act. Ekin is seeking compensatory damages, including a refund of all annual Amazon Prime membership fees, treble damages as provided under the Washington Consumer Protection Act, attorneys’ fees and costs, pre- and post-judgment interest, and all other relief deemed appropriate by the court.
Ekin is represented by Stephen J. Sirianni, Chris R. Youtz, Richard E. Spoonemore, Eleanor Hamburger, Charles D. Sirianni, and David M. Simmonds of Sirianni Youtz Spoonemore Hamburger.
The Amazon Prime Shipping Costs Class Action Lawsuit is Dr. A. Cemal Ekin v. Amazon Services LLC, Case No. 2:14-cv-00244, in the U.S. District Court for the Western District of Washington.
UPDATE: Amazon filed a motion to dismiss the Amazon Prime class action lawsuit on July 24, 2014, arguing that the plaintiffs lack standing to sue.
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