Consumer Class Action Alleges Amazon Charged Prime Members for “Free” Shipping

Dr. A. Cemal Ekin, filed a class action lawsuit in Washington federal court against internet retail giant, Amazon Services, LLC, on February 19, 2014 for allegedly advising vendors to increase item prices to offset “free” shipping offered to Amazon Prime members.

According to the complaint, Amazon sold Prime memberships to consumers for $79 per year, which entitled them to free shipping on Prime-Eligible items. As alleged in the complaint, prior to February 22, 2011, free shipping was the only benefit to consumers who purchased Prime memberships. Amazon allegedly encourages third-party vendors utilizing Amazon’s “Fulfillment by Amazon” (“FBA”) service, in which Amazon warehouses, sells, ships, handles returns, and provides payment and collection services for third-party-owned goods sold on Amazon.com, to list items for sale as Prime-Eligible. Vendors utilizing the FBA service are charged a fee by Amazon in exchange for having their items show up first in the list of customer search results.

Ekin alleges that “Amazon advised FBA Vendors to include the amount they would have charged for shipping in their item prices in order to maximize total revenue and profit margins.” Ekin argues that Amazon’s practices are not only a breach of contract, but violate Federal Trade Commission (“FTC”) guidelines. The lawsuit cites to the FTC’s definition of “free,” which explains that “a purchaser has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise or service by marking up the price of the article which must be purchased.”

Ekin has alleged causes of action for breach of contract and violations of the Washington Consumer Protection Act. He seeks compensatory damages, treble damages, attorneys’ fees, and interest on behalf of all US residents who became Amazon Prime members between October 24, 2007 and February 22, 2011, and paid one or more $79 annual Prime membership fees during that period.

If you or someone you know has been the victim of consumer fraud or breach of contract, you may be entitled to relief. Please call Khorrami Boucher Sumner Sanguinetti, LLP for a confidential consultation.