Amazon has agreed to pay $2 million in penalties and restitution after settling a lawsuit with San Diego County and five other California counties over potentially misleading price listings on its website, it was announced Thursday.
The complaint filed last week in San Diego Superior Court alleged that the e-commerce giant's use of "reference pricing'' in some of its online advertisements was either misleading or potentially misleading. The complaint pointed to the use of "Was'' or "List'' prices on the website, which advertise savings to consumers and routinely have strike-through lines across them.
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.
Prosecutors said "there were issues with how Amazon determined these reference prices and whether words like `Was' or `List' were used in a manner
that was misleading to consumers.''
The San Diego District Attorney's Office was joined in the complaint by the district attorney's offices in Riverside, Alameda, Santa Clara, Santa Cruz and Yolo counties.
In addition to the monetary penalties, the stipulated judgment reached Wednesday requires Amazon to make revisions to its pricing disclosures, which includes providing hyperlinks on its site that give consumers "clear definitions of the meaning of 'Was' and `List' price advertisements, so they understand the nature of the advertised savings.''
The DA's Office statement said Amazon "worked promptly and cooperatively throughout the district attorneys' investigation and has already implemented changes to its website and pricing algorithms consistent with the final judgment.''
San Diego County District Attorney Summer Stephan said that 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."
"Our Consumer Protection Unit continues to hold companies accountable and collaborate successfully with our prosecution partners across the state of California,'' she added.