by: Natasha Chen Updated:
Amazon announced the price of their Prime membership will soon increase to $99, just as at least two lawsuits were filed over their Prime pricing practices. The current price of $79 for Prime membership allows a customer to get unlimited free, two-day shipping on eligible items, unlimited streaming of more than 40,000 movies and TV shows and access to more than 500,000 Kindle books.
New Prime customers have until March 20 to lock in the current price, before it goes up to $99. Existing Prime customers renewing their memberships after April 17 will also pay the new price. This is the first price increase in Prime membership since it became available in 2005.
An Amazon spokesperson said in a statement:, “Even as fuel and transportation costs have increased, the price of Prime has remained the same. If you consider things like inflation and fuel costs, a Prime membership valued at $79 in 2005 would be worth more than $100 today.”
In the past few weeks, two people have sued Amazon over their Prime pricing tactics. Kim Stephens, a Seattle attorney, represents Marcia Burke. Their filing could end up being a class-action lawsuit. Another Seattle attorney represents Dr. A. Cemal Ekin in a similar lawsuit. They claim the free shipping was not actually free. Stephens said his client’s allegations apply to the years during which Amazon Prime offered only free, two-day shipping, without the benefits of streaming videos or Kindle books added later on.
Stephens demonstrated that for a Prime customer trying to buy a garbage can.
“They could get that garbage can for $20, shipped to them free. If they went on as a non-Amazon Prime member, they could that garbage can for $10, with $10 shipping," he said.
Stephens said the Prime customer is actually paying for shipping, only the item is arriving in two days, rather than the standard three days.
“You’re just getting an upgrade to two-day shipping. But what you’ve told them is you’re getting free, two-day shipping. We think that’s fundamentally misleading if you don’t tell them it’s not free shipping. It’s an upgrade. If it’s an upgrade, you should say it,” Stephens said.
In some cases, the same item was advertised at the same price, with the same offer for free, two-day shipping, even though one was through a Prime account and the other was not. Proving there was somehow fraud or deception involved is difficult, according to University of Washington law professor Anita Ramasastry.
“That’s a hard claim to make, because there are so many different business models and so many ways in which pricing occurs in terms of what the components are that are in there. Yes, you could say shipping shouldn’t be in there, but there are many different kinds of shipping,” Ramasastry said.
She also said it’s legal for online retailers to charge different prices for the same item, based on what they know about a customer’s habits, tracked through cookies.
Ultimately, Ramasastry said she does not feel the lawsuits or the price change will affect how people value the Prime service. She said customers seem to like it. Amazon benefits too.
“One is, they get your membership fee, two is they get you to shop there more often, and three, by doing that, they get more information about what you like and what you do,” Ramasastry said.