That “free shipping” perk of your Amazon Prime membership might not be such a great deal after all. Two separate lawsuits recently filed against Amazon claim the “world’s largest online retailer” encourages sellers to inflate prices on some products in order to cover shipping costs.
A $79 Amazon Prime membership (soon to cost $99) is advertised as providing customers with free two-day shipping on “millions” of items. Alabama resident Marcia Burke accused Amazon of encouraging third-party vendors to “conceal the shipping charges in the price of the product,” according to her lawsuit filed last Friday in federal court in Seattle.
The suit gives this example: If an item regularly sells for $10 with $3.99 shipping, Amazon suggests a vendor selling that product to a Prime member – someone who is getting “free shipping” – should charge $13.99 or higher. Prime-eligible products are highlighted on the website, and the suit claims, “[Amazon] provides these vendors priority by showing their items first in the Prime member’s product search results,” essentially duping those customers.
In what Burke hopes will be certified as a class-action lawsuit, she further claims that Amazon recommends this practice because it results in “a higher referral fee paid by [those vendors] to Amazon,” as well as “the direct and immediate recovery by Amazon, in whole or in part, of its cost of ‘free’ shipping.”
Burke says she used Amazon Prime’s “free shipping” benefit at least 18 times in 2010. The lawsuit covers Oct. 24, 2007 to Feb. 22, 2011, when the “free shipping” perk was Prime’s main attraction. (It wasn’t until after that time period when the membership began to include unlimited streaming of movies and TV shows and access to free books via Kindle.) Burke’s suit is on behalf of every Prime member enrolled between 2007 and 2011, and she is asking for a full refund of all subscription fees paid during that period.
Burke is suing for breach of contract under the Washington Consumer Protection Act, which prohibits “unfair or deceptive” acts in trade and commerce.
A. Cemal Ekin of Rhode Island similarly claims that he and “other Prime program members were harmed and deceived by Amazon’s activity because they paid the $79 annual Prime program membership fee solely for the benefit of free shipping. However, the prices of items offered to them as Prime program members were routinely inflated to include shipping charges.”
Ekin’s class-action lawsuit, filed in the same court as Burke’s papers in February, also seeks compensatory damages for members who paid Prime subscription fees between 2007 and 2011.
Amazon spokeswoman Julie Law refused to comment on the suits, saying only that the company has “a long-standing practice of not discussing active litigation.”