Amazon criticized for price reporting promotionFeatured, Shopping Saturday, December 10th, 2011
Amazon.com, the online retailing giant, was called “anti-competitive” for implementing a promotion that encourages consumers to enter stores without buying anything and reporting back the prices they found.
The promotion requires participants to use Price Check, a new mobile application to find and compare the in-store prices of other retailers. In return, the deal participant receives a five percent discount — to a maximum of $5 — from Amazon if that item is in the online retailer’s stock.
The deal can be used three times for a total discount of up to $15, on sporting goods, electronic items, music, DVDs, toys plus more items.
The promotion was criticized as “anti-competitive” spying because it encourages consumers to go to a store and gather information by scanning actual products with their phones.
Maine Senator Olympia Snowe, a member of the Senate Committee on Small Business and Entrepreneurship, sharply criticized Amazon’s promotion and called it a direct assault on brick-and-mortar retail stores.
“Amazon’s promotion — paying consumers to visit small businesses and leave empty-handed — is an attack on Main Street businesses that employ workers in our communities,” Senator Snowe said in a statement.
Another criticism of the promotion came from the Retail Industry Leaders Association (RILA) which said that “central to this tactic is Amazon’s continued practice of using a pre-Internet loophole to avoid state sales tax collection.”
The group appealed on lawmakers to control Amazon’s “exploitative” business practices. In addition, some trader associations believe the online retailer benefits from an unfair competitive advantage because it is exempted from paying VAT taxes in some US states.
Amazon is targeting to bring in more online purchases from U.S. consumers who still go to traditional retailers. The company aims to increase its fourth quarter revenue growth to 27 percent to 44 percent compared with a year ago.
Amazon shares in New York rose to $192.23, a gain of 5.8 percent compared to a year ago.