Amazon claims that a $79 annual membership for Amazon Prime provides free two-day shipping on "millions" of items, but for some products, the company is accused of encouraging sellers to inflate shipping prices, according to two recent lawsuits.
“The bottom line is the free shipping that Amazon offered to its Prime members wasn’t free,” said Kim Stephens, attorney for one of the plaintiffs, adding that he was “shocked” by Amazon’s alleged pricing practices.
Marcia Burke of Alabama says she became an Amazon Prime member and used its "free shipping" service at least 18 times in 2010, according to her lawsuit filed Friday in federal court in Seattle. Prime-eligible products are designated on Amazon’s website.
In what she hopes will be certified as a class-action lawsuit, Burke accuses Amazon of encouraging third-party vendors to increase their prices to Prime members by the amount they charged others for shipping, without revealing that a portion of those alleged "inflated" prices was for shipping fees, the lawsuit claims.
"For example, if the price of an item is advertised for $10 with $3.99 shipping and the [vendor] wishes to match or top their price, the [vendor] would charge $13.99 or higher," Burke alleges in the suit.
These sellers raise their prices to match or top their competitor’s total price, as items are sorted by price on Amazon’s site, Burke alleges in the lawsuit.
A spokesman for Amazon, Erik Fairleigh, declined to comment due to the firm’s policy related to active litigation.
In the time period that the lawsuit covers, Oct. 24, 2007 to Feb. 22, 2011, the main benefit for Prime members was the free two-day shipping. Starting Feb. 22, 2011, Amazon increased Prime’s appeal by including extras, such as movie and television streaming and Kindle e-book borrowing, the lawsuit states.
“An item included in its stated price the cost of shipping, but you thought you were getting it free,” Stephens said.