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Class Claims Amazon Cheats on Free Shipping

SEATTLE (CN) - Amazon encourages third-party vendors to inflate prices to help cover the costs of "free" shipping to Amazon Prime members, who pay a $79 yearly charge, customers claim in two federal class actions.

Marcia Burke and A. Semal Ekin filed separate but similar class actions against Amazon Services, alleging breach of contract and violation of the Washington Consumer Protection Act. Quotations in this article come from Burke's lawsuit.

Both plaintiffs say they were deceived by Amazon's promise of free shipping to Prime members.

"Amazon Prime members pay $79 a year for Amazon Prime, which gives members free two-day shipping on Prime-eligible products. Defendant recognizes that consumers who purchased an Amazon Prime membership did so to avoid or limit shipping charges," the complaint states.

"On information and belief, plaintiff alleges that during the class period, defendant encouraged vendors who use Amazon to ship its items (referred to as Fulfillment by Amazon or FBA), to mark up the prices of these items to ultimately include shipping charges. Furthermore, defendant provides these vendors priority by showing their items first in the Prime member's product search results.

"By concealing the shipping charges in the price of the product, Amazon is able to recoup the cost of shipping because it receives a percentage of the product's price."

Ergo, Burke says, Amazon Prime members do receive free shipping as represented because "the shipping charges were, in fact, included in the sales price despite Amazon's free shipping promise."

She says this is contrary to the meaning of "free" in Federal Trade Commission guidelines.

"Increasing an FBA item price by an amount equal to normal shipping charges - as recommended by Amazon - results in (a) a higher referral fee paid by FBA vendors to Amazon; and (b) the direct and immediate recovery by Amazon, in whole or in part, of its cost of 'free' shipping, contrary to its contractual obligations to Prime Program members, and contrary to FTC guidelines," according to the complaint.

Burke and Ekin seek class certification, refunds of all annual Amazon Prime membership fees paid during 2007-2011 and treble damages under the Washington Consumer Protection Act.

Burke is represented by Kim Stephens of Tousley Brain Stephens and Ekin by Stephen Sirianni of Sirianni Youtz Spoonemore Hamburger.

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