Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Apr 7 2015 23:52:31

Amazon Price-Fixing Case a Warning to Online Sellers

By: Ina Steiner

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Anyone who is tempted to enter into agreements with other online sellers to set minimum prices should pay attention to the story in Wednesday's Newsflash. Former Art.com employee David Topkins faces a felony charge for allegedly conspiring to fix prices of certain products (posters) on Amazon.

According to the announcement from the Department of Justice on Tuesday, Topkins entered into a plea agreement in which he agreed to pay a $20,000 fine and to cooperate with the ongoing investigation.

The story is a tale of caution about business partnerships as well. Topkins' company Gotham City Online (GCO) had sold its poster business to Art.com in 2012, which hired Topkins and GCO's other two principals, Jonathan Garriss and Adam Hersh. The three business partners allowed Art.com's poster business to operate on the same servers that hosted their own ecommerce business.

According to court documents in a lawsuit filed by GCO, the relationship between its principals and Art.com's legal counsel was "frequently, if not predominantly, adversarial in nature."

Art.com abruptly terminated Topkins, Garriss and Hersh on January 28, 2014 - Hersh claims Art.com accused the three of "wrongdoing" to justify firing them and as a pretext to hold back what he says was $6 million Art.com owed them.

Finally, while the accusations between Gotham City Online and Art.com fly back and forth, some of the allegations are noteworthy in that they explain how a merchant "could" deceive shoppers. 

"One form of false advertising by Defendant is its fraudulent "last chance" and "sale extended" sale promotions designed to deceive consumers and entice them to purchase Defendant's products on a false deadline at a supposed (and often illusory) discount. Defendant emails consumers that they have a firm deadline to take advantage of a "sale" price, even though Defendant and its senior executives have no intention to adhere to that deadline. The sale "deadline" is then "extended" according to a pre-planned schedule. This allows Defendant to send another email to consumers about the sale and to create two "last days" to drive sales."

and

"Defendant also intentionally hides promotions from customers who have purchased gift cards or daily deal discounts in order to prevent these customers from maximizing the return on their investments,... For example, Defendant runs promotions on third-party sites such as Groupon, where a customer can purchase a $50 discount card for $25. But when the purchasing consumers click through the promotional website links in order to redeem their purchases, Defendant's site technology hides current site-wide promotions and sales, which are often a better savings for the consumer than the promotion they just purchased." 

The allegation states that one employee was a "staunch proponent of these deceptive practices in order to minimize the impact of the Defendant's discounting programs and to drive up revenue."

It's a good time to examine your business practices - and business relationships - to make sure you aren't crossing any lines or putting yourself at risk.

Comments (17) | Leave Comment | Permalink
Readers Comments

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: gizmo This user has validated their user name.

Wed Apr 8 00:41:25 2015

Sounds like ebay. Hiding listings? Due to promotions? WOW , common practice nowadays.

Hey , dept. Of Justice , Ebay ???

Nothing would surprise me , I know theres more to come. Ever changing world of ecommerce , in a crashing society of cash hunger.

Money makes people crazy , relentless , vicious. Many lose site of their way. Some get what they deserve , maybe deserves more. Few are caught , in comparison to the reality.

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

This user has validated their user name. by: Philip Cohen
Web Site

Wed Apr 8 01:00:13 2015

Too funny. A little price fixing? What about the ugly reality of eBay’s demonstrable, massive, calculated, facilitation of endemic auction fraud on consumers on its auctions marketplace ... http://bit.ly/11F2eas

The eBay executive suite—where the incompetent mingle with the disingenuous, the malevolent and the outright criminal, and the just plain stupid ...  

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: sasikat9 This user has validated their user name.

Wed Apr 8 07:06:16 2015

If they ever investigated Fleecebay there probably wouldn't be more than one or two sellers left on that slimy site.

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: hopeforthebest This user has validated their user name.

Wed Apr 8 07:08:27 2015

This isn't new.

I think we all had a local furniture store in our town that had a 'going out of business - everything must go' sign on the front door... for 10 years!

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: RCL This user has validated their user name.

Wed Apr 8 09:50:26 2015

I still don't understand why the USPS allows eBay to lay on tax on 3rd party shipping fees!!!

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: gizmo This user has validated their user name.

Wed Apr 8 13:47:23 2015

@ming ,

I agree , I know lots of present & past sellers who are great people. The corporate leaders are the issue. Only words which fit , corrupt , corrupt business practices. Thats what makes deadbay blo.

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

This user has validated their user name. by: The End

Wed Apr 8 18:04:44 2015

Ebay itself is DIRECTLY engaged in price fixing.
I make my own product.
Ebay told me I could NOT sell my product anywhere else for the same or less. So I quit Ebay.
I see TONS of items listed on Ebay that are also listed on Etsy for almost double the price.
After dialoging with those sellers, I've concluded it is indeed an organized effort to falsely make Ebay look like a bargain.  

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: Ebay Seller-Ebay Buyer This user has validated their user name.

Wed Apr 8 19:21:19 2015

These are millionaires who have no problem with $20,000 fines. This relates to no one here.  People here are trying to survive as ebay sellers or have shifted to Amazon. Ebay just sent my buyer id a free promotion instead of my top rated seller account. I used my 50 free so now I debate whether to cut and paste my unsold from top rated seller account and find the picture codes and put them on my buy id and sell there.  And next month the 50 free drop down to just 20 free. Those are my concerns; not some millionaire poster/art dealers squabbling/cheating.  

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

This user has validated their user name. by: iheartjacksparrow

Wed Apr 8 20:19:44 2015

@hopeforthebest - When I lived in San Diego 30+ years ago there was a store like a dollar store that had a perpetual "Going Out For Business" sign in the front window, which, as you might imagine, everyone would read as "Going Out OF Business" and think they were getting great deals.

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: pace306 This user has validated their user name.

Wed Apr 8 23:18:29 2015

Nothing new to see here ... eBay does this with manufacturers via VERO all fay long.

Any time a manufacturer complains to eBay about MAP or UPP violations, eBay responds by letting the maker VERO the seller off eBay.

eBay also allows it to happen "intercountry". I had it happen with Casio.

Casio EU complained that even though I list on eBay USA and the goods are USA goods stored and shipped from the USA, it harmed their EU dealers who were charging way too much. Then then used VERO to "agree" to remove my listings under the guise of a treaty the USA isnt party to. By definition it wasnt Trademark or Copyright infringement - it was simply maintaining market prices and EU dealer arraignments.

On Amazons side ..... pffft - they do it all the time as well. PLEASE, they do it with ANY brand that demands they lock SKUs to maintain MAP (ala Monster, Denon, Pioneer, Sony and MANY others). In the electronics area, alot of SKUs are "used only" you cant list as NEW, because Amazon conspires with the makers to insure certain pricing levels.

All this is standard business in almost ALL marketplaces - online and brick & mortar.

"Believe that"

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: BB2 This user has validated their user name.

Thu Apr 9 02:10:17 2015

Ha! This is how naive I was... I thought that was common practice.

This type of thing has been going on for centuries. They're not pitching snake oil, but the premise is the same. Someone is always going to try a new angle, if their reward is an extra buck.

I gave up trying to compete with such shenanigans a long time ago. I need to be able to sleep at night.

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: Moonwishes This user has validated their user name.
Web Site

Thu Apr 9 09:08:25 2015

I stopped paying attention to what other sellers charge years ago. Since putting them on ignore, I've sold more items for a higher cost that when I tried to charge around/about what other sellers charged. I haven't got a clue why someone would want to make deals behind everyone's back to set prices, but I guess they do.

Being as this was about a suit against several Amazon sellers, I'm surprised but probably shouldn't be, to see how many comments on this post ignored Amazon completely and made it an ebay issue.  

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: Tornad0sRul This user has validated their user name.

Thu Apr 9 10:59:37 2015

I only wonder how the dirty legal system is tied to EBay because EBay does this stuff every single day but never gets busted or prosecuted.

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: nothingnew This user has validated their user name.

Thu Apr 9 11:45:41 2015

Oh! Pa lease! Price fixing been going on since people crawled out of the caves. Nice try FBI , why dont u do some REAL INVISTAGATING! Like at ebay! That measly 20 g's? Turn it into 20 million at ebay with all their sleazy stealing from sellers and buyer fraud going on rampant! Put this pittiful case to rest. When you really do something good. Let us know! Ha!

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: Gina This user has validated their user name.

Fri Apr 10 17:57:18 2015

if this becomes precedence, THOUSANDS of businesses, totally guilty of this practice will be brought to court!  The courts will realize this and toss out all such cases to avoid an avalanche of legitimate claims!

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

by: tony bonn This user has validated their user name.
Web Site

Mon Apr 27 16:09:33 2015

this case is an example of more government hypocrisy and criminality.

there is massive corruption in the libor, gold, and stock markets, yet the government goes after small fry.

Jamie dimon, Lloyd blankenfein, blythe masters, and a host of finance criminals should be vigorously prosecuted, along with the entire fed, and yet the government spends its money on trivial pursuit.

and yes I fully understand that different government agencies and jurisdictions are involved, but I won't sleep any better knowing that these individuals have been accused of something, but I sure would if wall street criminals perpetrating massive frauds and cons were being prosecuted and living behind bars.

Perminate Link for Amazon Price-Fixing Case a Warning to Online Sellers   Amazon Price-Fixing Case a Warning to Online Sellers

This user has validated their user name. by: FEEbay

Sun Nov 29 11:39:42 2015

@pace306
The whole "MAP" thing is Anti-Trust, Restraint of Trade, Collusion...etc... And it is going to go away soon...



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