Customer Outrage Prompts Amazon to Change Policy

In the wake of customer outrage in response to a recent pricing glitch at Amazon.com Inc. as well as to its policy on price testing, the online retailer said it has decided to alter that price testing policy and refund money to consumers who paid higher prices for a particular item than other customers.

Last Thursday, a pricing glitch at Amazon.com's DVD store incorrectly listed the prices of some DVDs at prices significantly lower than their actual prices, according to Amazon.com spokesman Bill Curry.

When Amazon discovered the glitch, it e-mailed customers who had purchased DVDs at the incorrect prices and asked if they still wanted to purchase the items at their correct but higher prices. This was done in accordance with Amazon's posted pricing policy, Curry said.

The company isn't planning to honor the incorrect -- or lower -- prices, he said.

Customers, however, are unhappy about the decision and have been venting their anger in the chat room of DVD Talk, a Web site dedicated to DVDs.

One customer, Dan Bither of Wilmington, Del., said that he would file a complaint with his state's attorney general if Amazon didn't honor the $16.99 price he was originally quoted for the DVD Jet Li box set. Bither said Amazon e-mailed him, quoting a price that was 470% higher -- $79.99 -- than the price he was originally quoted. He said he also planned to sue the company in small claims court.

In August, a similar glitch occurred in Amazon's toy store, allowing customers to purchase toys at deeply discounted prices. Because Amazon honored the lower prices for some customers, others filed complaints with the U.S. Federal Trade Commission and the Better Business Bureau claiming Amazon was engaging in deceptive advertising and unfair business practices.

Bither, however, said he thinks the pricing problem wasn't a glitch but the result of the price testing Amazon conducted in its DVD store last week.

Last week, Computerworld first reported that Amazon was conducting various price tests in its DVD store that could result in one consumer paying as much as $15 more for the same item as another consumer.

After being bombarded with complaints from customers, however, Amazon changed its policy. Curry said that in the event Amazon conducts price testing in the future, the company will automatically charge every customer the lower price and has now taken steps to refund the difference in price to customers who paid the higher test price.

But Bither forwarded an e-mail to Computerworld that he received from Christopher Kenyon, a customer service representative at Amazon, in response to his outrage over the pricing problem with the Jet Li DVD box set.

That e-mail blamed the incorrect price on the price testing, not on a computer glitch.

"From time to time, we test and re-evaluate various aspects of our Web site to determine which characteristics drive customer purchases and satisfaction . . . Price is one aspect we may test, and, accordingly, that means that some customers may pay a different price for select items," Kenyon said in the e-mail to Bither.

"I think what happened is that Amazon filled too many orders in their test and doesn't want to honor them," Bither said.

Barrett Ladd, an analyst at Gomez Advisors Inc. in Lincoln, Mass., said Amazon's decision to change its price-testing policy reflected the company's consumer focus.

"They listened to customers and got a lot of feedback so they realized that one customer is not happy paying a higher price for an item than another customer who lives down the street," she said.

But Ladd said the fact that Amazon didn't realize that before could mean that, "maybe [Amazon] didn't think anyone would find out about the [price tests]."

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