Amazon Pays $2 Million to Settle Reference Price Allegations

Kelley Drye & Warren LLP

Shortly after the state of California filed a lawsuit against Amazon alleging deceptive prices, Amazon agreed to pay $2 million in penalties and restitution.

Under the stipulated judgment, Amazon is restrained from using an advertised reference price based on a formula, algorithm, or other method that produces misleading or false results until April 1, 2024. Amazon cannot advertise a reference price unless it provides:

(1) a clear and conspicuous hyperlink to a clear and exact definition of the term; and,

(2) the definition includes a statement that the reference price may not be the prevailing market price or regular retail price.

Amazon is required to pay $100,00 in cy pres restitution, $1,700,000 in civil penalties, and $200,000 to the Riverside County District Attorney’s Office. Amazon’s settlement is a good indication for what state enforcers are interested in when it comes to reference prices. Under California law, reference prices must reflect the prevailing market price as defined within three months of the advertised prices.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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