Amazon Erases Orders To Cover Up Pricing Mistake

The Knife writes "Amazon secretly canceled orders for a large jazz CD set after realizing that it had mis-priced the item at $31 instead of its MSRP of $499. At first, inventory shortages caused the online merchant to string customers along for over a month after they placed their orders. But when Amazon realized that the box set was under-priced by $470, it simply erased all records of customers' order in their account history. No emails were sent to customers informing them of the price change or of the order cancellation. Probably because it violates Amazon's highly publicized price guarantee policy. A customer who called to complain and request the CD set at the $31 price was given a $20 discount off of his next Amazon order." A caveat: there is no external confirmation that Amazon did what is claimed here.

External Confirmation?

[KingSkippus]

A caveat: there is no external confirmation that Amazon did what is claimed here.

External confirmation? I don't even see any internal confirmation. The one link in the submission goes to the item on Amazon.com's site, at which there is one glowing five-star rated customer review. As far as I can tell, this submitter simply wrote up something that may or may not be a complete fabrication with absolutely zero backing evidence, without even so much as a "here's my blog article about the experience," and somehow it make the front page.

Where's the screenshot of the item being offered for $31? Where's the printout of the placed order? Who were those customers that Amazon strung along for over a month, and where are they complaining? Was there even more than one? Was there even one? What "highly publicized price guarantee policy?" Are you talking about? This one [slate.com], which Slate describes as "not something Amazon publicizes?" You are aware that companies don't have to honor prices that are obvious misprints, right? (And that a 75-CD limited edition import CD set being sold for $31 is an obivous misprint, right?)

Man, next time I have a beef with some company, remind me to completely make some shit up about them and post it as an article here on Slashdot. I'm usually not one to gripe about the job the editorial staff does here, but you guys really drop the ball in a major way on this one. Whether you like Amazon.com or not, with nothing to back it up, this borders on outright libel.

Re:Bad Summary.

[phillips321]

You missed the point! Order's were canceled and the customer was not informed about it. Amazon's policy clearly states:
"and notify you of such cancellation"

Re:Legality?

[Anonymous Coward]

What's the legality of this? I think in some jurisdictions if you go to a brickNmortar store and they've mispriced something they're legally bound to sell it to you.

You mean if the stockboy puts the wrong price on an item that's on the shelf, that's the price they the store has to sell it for? I doubt there's a law anywhere in the country that says that. Making mistakes is bad for the store's image but they aren't legally obligated to honor such an error.

If you're talking about sale prices in advertisements that's something else entirely. Though in most cases a misprint is still a misprint (they may have to put up signage to indicate that, laws vary.)

In any event, this was a mistake, no harm done, and any mature, reasonable and ethical person wouldn't expect them to honor the mistaken price. The only way this could be considered a story were if Amazon were to try to extort money after the fact or demand returns from customerswho managed to complete the purchase.

So???

[EdIII]

Even if this was true, and verified independently by many sources.... so what??

If you honestly thought it was 30$ to begin with and made the order and were charged for it, then you might have something to complain about it. I still think Amazon would be right to cancel the order and refund your money. So you may have been inconvenienced, but a 20$ discount demonstrates some pretty respectable behavior from Amazon.

It's a little ridiculous to expect Amazon to eat thousands of dollars in losses over an error on their website. Maybe it's just common sense, or being raised right, but when you think somebody is making a mistake and you profit from it, that is just WRONG. If you knew it was worth 10 times that price and it was a simple mistake, how moral is it to purchase it?

I have had plenty of stupid teenagers that can not do math correctly give me my change incorrectly. I have even given a 100$ bill to a girl, who gave me 130$ BACK.

The last time I had a situation like that was at CompUSA. I bought a few Motorola routers and access points and was surprised when all of them rang up for 19.99$ each. I brought it up to the clerk, got the manager, and explained that it looked like a mistake and that the labels actually said a different price. The manager, shockingly, acted like a complete dick and stated that he had no control over the information in the databases and could not do anything for me. They was not any in stock anywhere else, so I ended up getting them for my client anyways.

The point was that I TRIED to deal with them fairly. On another note, maybe that is why CompUSA went out of business.

Re:Bad Summary.

[eyrieowl]

that may be the point, but it's a weak one. is it really news to all of us that sometimes companies don't follow all the steps they say they are? if amazon had charged them, failed to deliver, and "forgotten" about the orders, that would be one thing, but the harm done here is...somewhat minimal. did anyone die b/c they didn't get their fire-sale priced box set? thought not. while i'd certainly be sad if i found out i couldn't get the deal of a lifetime, eh, you don't win the lottery every day.

riiiight

[Anonymous Coward]

and the customer was not informed about it

according to the oh-so-thorough summary that has ZERO links (except for one to amazon's own site with the $499 price). this summary smells a lot like someone who ordered the "$30" set from amazon in bad faith, hoping they wouldn't notice the mistake and $500 worth of CDs would show up a few weeks later. when the order was cancelled, off to slashdot they ran, hoping to stir up some sentiment against amazon. Now, maybe Amazon really DIDNT notify the customer(s) in this case, but in other publicised examples (as well as anecdotally in the grandparentpost) they *DID* do so.. so without evidence that they violated their own policy (which, by the way, is just a policy.. until they charge your credit card no contract exists), they're entitled to the benefit of the doubt.

Comment removed

[account_deleted]

Comment removed based on user account deletion

so obvious

[Scudsucker]

It's a little ridiculous to expect Amazon to eat thousands of dollars in losses over an error on their website.

Then they should take as a lesson and improve their site.

Maybe it's just common sense, or being raised right, but when you think somebody is making a mistake and you profit from it, that is just WRONG.

No, THEY MADE A MISTAKE. Nothing wrong about it, and the converse is equally true: if you buy a cd set from Amazon priced at $400 when another site has it priced at $30, it's your own damn fault for not checking the price.

And while we're on the subject of right and wrong, Ms. Manners, what about the retailer trying to sweep their mistake under the rug instead of manning up and admitting their mistake?

Re:Legality?

[jacksonj04]

[Citation Needed]

Re:Amazon sucks, what's new?

[xubu_caapn]

i just went to amazon.co.uk --> help --> cancelling an order, then found an email address and phone number. didnt look very hard, did you?

Re:Bad Summary.

[aznel]

Ok, who let the 1L out of their cage?

Re:so obvious

[Firas Zirie]

Then they should take as a lesson and improve their site.

Product information -including price- is most likely manually entered into their database. Why do you think Amazon should swallow thousands of dollars worth of losses over a typo?

No, THEY MADE A MISTAKE. Nothing wrong about it, and the converse is equally true: if you buy a cd set from Amazon priced at $400 when another site has it priced at $30, it's your own damn fault for not checking the price.

Wow, is the idea of screwing the corporations so tempting to you that any shred of morals is lost? I don't think you would be saying what you are saying if any of this involved your money now would you?

And while we're on the subject of right and wrong, Ms. Manners, what about the retailer trying to sweep their mistake under the rug instead of manning up and admitting their mistake?

I'm afraid I can't disagree with you there, that is exactly what they should do.

Re:So???

[EdIII]

I understand what you are saying, but the article is a transparent PR job on Amazon, and demonstrably so.

Bait and Switch does not apply here, and the laws that were created around it certainly do not apply here either.

There is a little confusion about what constitutes a transaction here. Traditionally, that has always been a face to face, arms length transaction where the 2 parties walk away from each other. I would say that neither party has a right to complain about the price afterwards. Caveat Emptor.

However, does that really apply to the ability to cancel online orders BEFORE they are fulfilled? IMHO, transactions are not completed until the product is actually received and compensation exchanged. The article makes it clear that the orders were canceled and the products were not shipped. Therefore, the transactions were not completed.

Although it is not very nice for Amazon to not notify customers of the problem, the 20$ discount demonstrates a good faith effort to compensate the customers for their wasted time.

Re:Bad Summary.

[jasonwc]

Well, you're jumping to conclusions. The fact that there was a breach of contract doesn't mean that the buyer can recover for the contract price - the next best available price. You point out that once there has been an offer and acceptance, a binding contract is created and Amazon is unable to repudiate. While that is true, the contract clearly allowed Amazon to cancel a buyer's order if the price was set incorrectly which certainly was the case here. Thus, Amazon was justified in its cancellation of the buyers' orders. If there was a breach, it was only the failure to notify the buyer of the order cancellation. I'm not sure from the contract terms whether a court would find there was a breach. The terms may be read as suggesting Amazon's current policy of notification rather than binding themselves to do so. In any event, a buyer would not be able to recover for the contract price - the best available price because that does not reflect the damages actually suffered. The buyer's expectation damages ought to put him in the position he would have been in had the contract been performed. Since Amazon's only failure was to notify him of the order cancellation, damages should be assessed based on the harm which resulted from lack of notification. In addition, it seems pretty clear in context that when UCC 2-711 speaks of the sellers failure to make delivery, it's referring to an unjustified refusal, rather than a justified refusal combined with a relatively minor breach. In the instant case, a court would likely award nominal damages due to the lack of any clear harm to the buyer.

Furthermore, the measure of damages had there been an unjustified refusal to make delivery would be based on the difference between the market price of the good at the time when the buyer learned of the breach and the contract price (2-713) or in the alternative, the buyer could "cover" by buying the item at another retailer and sue for the difference between the contract price and the purchase price of the replacement (2-712). Cover doesn't even require that the price be the "next best price" - only that it is made in good faith and without unreasonable delay. This may very well exceed the market price if the buyer wants the item immediately and is willing to pay a higher price for the convenience of a local retailer.

Re:So???

[EdIII]

You want to argue that there are remedies under the law. Since you, along with another poster, specifically site bait and switch laws let us discuss those particular laws. From http://www.ftc.gov/bcp/guides/baitads-gd.htm [ftc.gov]

Sec. 238.0 Bait advertising defined.1

Bait advertising is an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised.Sec. 238.1 Bait advertisement.

Amazon clearly intended to sell the product. They were not trying to switch to a different product at the higher price. The mistake could be seen as having the side effect of selling the same product at the higher price.

No advertisement containing an offer to sell a product should be published when the offer is not a bona fide effort to sell the advertised product. [Guide 1]

Sec. 238.2 Initial offer.

(a) No statement or illustration should be used in any advertisement which creates a false impression of the grade, quality, make, value, currency of model, size, color, usability, or origin of the product offered, or which may otherwise misrepresent the product in such a manner that later, on disclosure of the true facts, the purchaser may be switched from the advertised product to another.

(b) Even though the true facts are subsequently made known to the buyer, the law is violated if the first contact or interview is secured by deception. [Guide 2]

They advertised the exact same product before and after the price change. No differences in quality, make, value, etc. Just a difference in price. I truly don't think that databases errors can be seen as deceptive acts. Deception is a characterization of a behavior. Was Amazon truly, in a premeditated fashion, deceiving the consumer with an error in their database? I would say that is very hard to prove, and on the basis of a single product error, especially given the volume of transactions that Amazon conducts.

Sec. 238.3 Discouragement of purchase of advertised merchandise.

No act or practice should be engaged in by an advertiser to discourage the purchase of the advertised merchandise as part of a bait scheme to sell other merchandise. Among acts or practices which will be considered in determining if an advertisement is a bona fide offer are:

(a) The refusal to show, demonstrate, or sell the product offered in accordance with the terms of the offer,

(b) The disparagement by acts or words of the advertised product or the disparagement of the guarantee, credit terms, availability of service, repairs or parts, or in any other respect, in connection with it,

(c) The failure to have available at all outlets listed in the advertisement a sufficient quantity of the advertised product to meet reasonably anticipated demands, unless the advertisement clearly and adequately discloses that supply is limited and/or the merchandise is available only at designated outlets,

(d) The refusal to take orders for the advertised merchandise to be delivered within a reasonable period of time,

(e) The showing or demonstrating of a product which is defective, unusable or impractical for the purpose represented or implied in the advertisement,

(f) Use of a sales plan or method of compensation for salesmen or penalizing salesmen, designed to prevent or discourage them from selling the

Re:Bad Summary.

[baboo_jackal]

Actually, this reminds me more of the people who stand at the register and argue with the manager, "But it was on the 99-cent rack, so you *have* to sell it to me for 99 cents!"

Fortunately, those people don't know about Slashdot yet...

Re:Bad Summary.

[Sancho]

It's still a bad summary. The awful, awful summary posits that Amazon did not notify their customers because it violated their policy to cancel the order. Clearly it does not violate their policy to cancel the order--the only policy violation was, in fact, failing to notify the customer's about it. The submitter is putting the cart before the horse, so to speak.

In other words, the submitter thinks that Amazon violated its own policy, and tried to cover it up by silently deleting the orders. Based on that policy snippet, that does not seem to be the case.

Re:Bad Summary.

[Dogtanian]

You must be a first year law student Valdrax.

If he was, he'd still be better-qualified to talk about how the law works than 99.9% of the people contributing to this and similar Slashdot discussions.

The problem is that although some people here probably know what they're talking about, it's hard to judge which ones they are without spending more time than it's worth sorting them out from the undeclared IANALs. (Skip to the final paragraph for the main point minus the waffle).

You have to ask yourself- what level of knowledge is this person arguing from? Do they even understand the basics of what they're discussing? If so, do they understand the finer points and exceptions that apply to "corner cases" such as this one? Unless you already know the law pretty well (I don't), it's often impossible to judge- and whilst I'm no expert and don't pretend to be one, I don't intend to be a blind man being led by another overconfident but equally blind man.

In all honesty, *any* Slashdot discussion about the finer points of law will quickly become an intellectual wankfest that mixes up basic misunderstanding, myths, attempts to reason out what the law actually is (*1) and assumptions that the way the law *should* be is the way that it actually is. (*2)

The law does have intellectual consistency, but not in the way that Slashdot-style pseudo-logic can be applied to it. Otherwise, engineers would make great lawyers and vice versa.

(*1) No, you can't always logically deduce what the law actually is through logic- particularly not corner cases. The law is what the law is, even when it doesn't always make sense. It's an example of the conceit that you can apply geek/engineer-style logic to any field. In a way, this is the same point as *2 below.

(*2) Yes, the law sometimes sucks and is stupid- and it's perfectly valid to discuss its flaws and how it should behave. But the fact remains- you *can't* assume that the way it *should* be, or even the way that "common sense" (or some convoluted pseudo-intellectual Slashdot argument) says it should be is the way that it actually is.

To cut the above short, threads like this are basically useless for shedding light rather than heat, because the majority of contributors are IANALs who'll try to (incorrectly) apply pseudo-logical reason to cover their lack of legal expertise.

Doctrine of Mistake.

[Anonymous Coward]

In general terms, you're right. See Restatement of Contracts 2d, Section 153.

Section 153. When Mistake of One Party Makes a Contract Voidable.

Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material affect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in Section 154, and

(a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or

(b) the other party had reason to know of the mistake or his fault caused the mistake.

***[Section 154 assigns the risk to the mistaken party under limited circumstances: if the agreement so says,; if he is aware that his "limited knowledge" may cause such a mistake; or if a court determines that such assignment is reasonable. None likely applies to Amazon, here.]***

See also, Illustration 1 to Section 153:

In response to B's invitation for bids on the construction of a building according to stated specifications, A submits an offer to do the work for $150,000. A believes that this is the total of a column of figures, but he had made an error by inadvertently omitting a $50,000 item, and in fact the total is $200,000. B, having no reason to know of A's mistake [emphasis added] accepts A's bid. If A performs for $150,000, he will sustain a loss of $20,000 instead of making an expected profit of $30,000. If the court determines that enforcement of the contract would be unconscionable, it is voidable by A.

And in this case, the consumer did have reason to know of A's mistake. (A 75-disc import for $30? Puh-lease...) I'm not a lawyer, so interpret for yourself: But I don't think it takes more than a teaspoon of common sense to recognize that no judge is going to find in favor of some slippery shmuck who tried to take advantage of an obvious mislabel to the tune of $470.

Re:It's not that simple

[EdIII]

Let me respond, but before that let me be clear about what I believe Amazon did FTA:

1) Amazon offered a product for sale at a price less then 1/10th of the "real" price. 2) Amazon took orders from customers. These orders constituted an offer to purchase at the stated price, IMO. 3) Amazon did not fulfill, or ship the products. 4) Amazon did not communicate anything to the customers. 5) Amazon canceled the orders.

Okay, let's apply your thinking elsewhere. Like some of those sleazy online camera stores, advertising very attractive camera prices. They start accepting orders for new cameras, wait a week or two, then start calling customers back and saying they made a mistake and offering them a different model for slightly more. The dealer calls it an honest mistake...one they repeat regularly.

You are talking about behaviors that are clearly covered under Bait and Switch laws. My thinking does not apply to them, nor did I claim it to be so. I do not believe that Amazon pulled a Bait and Switch game here.

The only way companies will exercise reasonable care in advertising is if they're held accountable for what they advertise. Cell phone, cable companies, airlines, rental car companies, the camera stores mentioned above and hotels are getting to the point their advertised prices are fantasy. Where's the accountability?

Amazon does not advertise their products. Unless this specific item appears in banner pages on other websites, it is not an advertisement. It is merely an advanced interactive product listing. I wholeheartedly believe that companies need to exercise reasonable care in advertising and be held accountable for those advertisements. I just don't think that a product listing page on a website constitutes advertisement in the traditional sense. What is reasonable care? No system can be perfect, and unless you can demonstrate that this is a pervasive problem within Amazon's systems I would propose they are taking "reasonable care" in the design, implementation, and review of their information systems. I am a database designer, so I can tell you that no system is perfect, but I certainly work very hard to reduce or outright eliminate errors like this.

What we definitely don't need now is a corporate apologists blaming the victim

I actually take offense to that, since it seems to be directed towards me. I am very pro-consumer, and I am as certainly fed up with the amount of bull in this country. Stepping back from the situation and evaluating it logically, rationally, and impartially, is not the actions of an apologist.

I am stating that there is a distinction between this specific act and the general behavior of bait and switch companies. You can read my other post where I cite Bait and Switch guidelines from the FCC and use them on the aforementioned actions of Amazon. I also stated certain moral implications of the behaviors being performed FTA, and the overall tone of the article being a poor PR job on Amazon. If we are going to demonize Amazon for something, let's pick a better example with clearer evidence.

blaming the victim

Victims? Who? Where?

If any of those customers honestly thought a boxed CD set of Jazz with what looks like to be 30-40 cds was really 30$, then they were inconvenienced and had their time wasted. They are certainly not victims for that alone. Amazon did not offer them more products, different terms, or prolong any more pain. They simply canceled the transactions. They way they did left MUCH to be desired. I DO NOT blame these people.

For those customers that knew the product was being offered at the incorrect price and ordered it anyways, I stated that they are being immoral doing so. I do blame them. I will continue to blame them. They tried taking advantage of Amazon, and do not deserve a "pass" sim

Re:riiiight

[yog]

I've spend thousands of dollars at Amazon over the past eleven years. One time I received a faulty Brother printer which Amazon promptly replaced, no questions asked, the new one sent in advance, trusting me to return the old one once I received the prepaid shipping sticker. (Brother's customer support was completely useless, which is why I'll never buy Brother again, but that's another story.)

Not once have I ever experienced a pricing problem or other anomaly that might mar my buying experience. I have also taken advantage of Amo's easy approach to selling my stuff back to others and have unloaded many textbooks and DVDs over the years.

In short, Amazon for me represents the most successful of the new online retailers; they have won my trust and admiration, no easy feat, and so I find this Slashdot story to be questionable at best. I am willing to believe that such a mistake occurred, but without any links or independent confirmation of the accusations it really sounds more like a disgruntled customer out to hurt them as much as possible. Given my own experience and that of many friends and associates over the years I would be surprised if this were anything more than a blip.

Hold up

[Travoltus]

Then they should take as a lesson and improve their site.

Product information -including price- is most likely manually entered into their database. Why do you think Amazon should swallow thousands of dollars worth of losses over a typo?

No, THEY MADE A MISTAKE. Nothing wrong about it, and the converse is equally true: if you buy a cd set from Amazon priced at $400 when another site has it priced at $30, it's your own damn fault for not checking the price.

Wow, is the idea of screwing the corporations so tempting to you that any shred of morals is lost? I don't think you would be saying what you are saying if any of this involved your money now would you?

So basically you're saying people should not be held responsible for their mistakes.

Hey, according to you, I can price anything the way I want, and if I decide the price is too low today, cancel the order! Now that's morality, at least on planet Firias Zirie.

Re:Bad Summary.

[eyrieowl]

i don't recall mentioning contract. were i in contract law, i might give a rip about the legal definition of harm. however, in my news stories, i prefer people to save their hyperbole for stories where real harm is occurring, not where they got stymied in their attempt to screw a corporation. so, i stand by my statement that no real harm occurred, and that this is not really news. there are enough real examples of corporations causing financial damage and ruin that we need not resort to such trivialities we see highlighted here.

Re:Bad Summary.

[Jeff DeMaagd]

It's an honest mistake and I think people would be clearly unreasonable if they didn't like Amazon coming clean and declared this a misprice. But if it's true that Amazon just erased all traces of their order without explanation or notice, then I would have a problem with that.

Re:I don't see anything out of the ordinary here..

[STrinity]

It's worse than that. Nowadays they correct the price on their website, ship the product out, and then they submit fraudulent charges using the credit card info they have on file in order to "make up the difference."

In the case you're citing, there was never an error with the prices listed on Amazon. They advertised a buy-one-get-one-free sale, but a glitch in the system caused the cheaper price to be deducted twice -- which meant that if someone bought two items of the same price, they were both free. The advertised price was right -- the price at checkout was wrong. The "fraudulent charges" weren't based on Amazon changing prices -- it was Amazon charging the price they had actually advertised.

Everyone in that thread knew they were taking advantage of a mistake. There's one guy in that thread who ordered every item in the sale -- over a thousand dollars worth of DVDs -- paired in such a way that it was all free. I don't think he even had to pay shipping. Yes, Amazon screwed up by not canceling the orders when they corrected the glitch, but apart from the first person to notice the problem, everyone on that thread knew they were taking advantage of a programming error. As such, I have a hard time feeling sorry for them.

Re:Bad Summary.

[baboo_jackal]

No argument there. I think you hit on the key point of this issue, though:

But in those 4.99 DVD bins at Wal-Mart you never know what your going to find, since there's no list on the side w/what should and shouldn't be in there. so... yeah, I'd argue if it wasn't obviously the wrong thing or the wrong price.

The example in this article would be like finding, for example, all three seasons of Battlestar Galactica in the $4.99 DVD bin at Walmart. You *know* it doesn't belong there, and you'd have to be a fool or a thief to insist that it did.

Bad Faith Purchase

[linuxtweaker]

I hate to side with a corporation, but in this matter I do have to agree with Amazon:

This box set has been around since 2003. It's not something that a casual music listener purchases. It's something that will attract musicologists, historians, and hard core jazz fans.

The fact that Amazon managed to lay their hands on three copies of this set to sell is amazing! I searched for it a few years ago, and only found one or two new copies of it. The used copies that were on the market were going for $600 or more.

To be honest, I am totally baffled by what the problem is here? Amazon has a cancellation policy if an item is priced incorrectly. At least one person has posted a notice they received of the cancellation.

Is it wrong for a company to not get raped for $1500? Is it wrong for them to not honor a bad faith sale? Is it wrong for them to correct an error in their system? (How many errors have they corrected in customer's favor?)

Back to my previous perusal of this set: I wanted this set, but I knew that I couldn't afford to spend $500 on any CD collection, despite the fact that it is an EXCELLENT set. My solution was to scrounge hard and find the four 3-disc box sets. They provided an excellent overview of the material in the larger set, and satisfied my hunger for the bigger set. Alas, my quick search of Froogle didn't turn up many copies of them (however, if memory recalls, they were difficult to find the first time around - I think I had to search by the individual box titles).

Honestly, the author of this piece just needs to suck it up. If he really wants the set (and, even at $500 it is still an EXCELLENT bargain - only $6.67 per disc!) then buy it at the proper price. If he really doesn't want to pay the $500, then try to find the other sets, or look elsewhere.