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Amazon faces lawsuits over Prime membership benefits

On Behalf of | Mar 14, 2014 | Business Litigation

Online retailer Amazon has enticed customers to purchase its “Amazon Prime” membership with the allure of free two-day shipping on all of its items, in addition to access to its streaming video content. However, two recent lawsuits are challenging the company’s promise that its shipping protocol actually was not free.

Essentially, plaintiffs claim that some items were artificially inflated to include the cost of shipping, thus negating the “complimentary” shipping benefit. 

The lawsuits claim that between October 2007 and February 2011, the two-day shipping benefit was advertised as a primary benefit. After that, the Prime membership included the streaming extras that current members covet. However, plaintiffs claims that third-party vendors were encouraged to increase the prices on their items to compensate for shipping costs. So what would normally cost $10.00 with a shipping cost of $3.99, would be advertised on Amazon Prime at $13.99 with free shipping.  

Because of this, the plaintiffs claim that many non-Prime members would pay less for their items than Prime members. With tens of millions of Amazon Prime members potentially affected, the plaintiffs hope that their lawsuits could be merged into a class action.

California law prohibits vendors from using false or misleading information in advertising their products or services.

In the meantime, one of the plaintiffs, a resident of Alabama, is suing for breach of contract, and is seeking a refund of her membership payments, as well as other members, for the years that they paid for the benefits that they did not receive. Also, Amazon recently announced that it will raise the price of Prime memberships to $99.00 from $79.00.

Source: ABC “Amazon customers accuse e-commerce giant of cheating prime members,” Susanna Kim, Mar. 12, 2014