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Amazon Prime Lawsuit: Are Prices Inflated to Cover ‘Free’ Shipping?

Some vendors included shipping fees in item prices


A member of Amazon’s (AMZN) Prime service is suing the online retailer, claiming that the free-shipping service wasn’t so free when it came to items sold by third party vendors.

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The Amazon Prime lawsuit was filed by an Alabama woman who joined Amazon Prime in 2010 and used the free-shipping service more than a dozen times. The Amazon Prime lawsuit alleges that third-party vendors were encouraged to include shipping charges in item prices, without informing Amazon Prime members. The practice would produce higher referral fees paid by the vendors to Amazon, ABC News notes.

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An attorney for the woman said that Amazon Prime members thought shipping for those items was free when they were actually paying for it in the item’s stated price. He also noted that non-Amazon Prime members often were charged less for the same items.

The Amazon Prime lawsuit is seeking class action status and covers the period between Oct. 24, 2007 and Feb 22, 2011. The Amazon Prime lawsuit accuses Amazon of breach of contract and is demanded refunds for Amazon Prime members — who paid $79 a year — during that period. The suit was filed in Washington state under the Washington Consumer Protection Act.

A similar Amazon Prime lawsuit has been ruled by a Rhode Island man.

Shares of Amazon rose about 1% in Friday mid-day trading. AMZN stock has gained more than 35% over the past 12 months.

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