Amazon promo challenged

June 27, 2001 Posted: 1118 GMT

NEW YORK (CNNfn) -- Amazon.com launched a free-shipping promotion on its site last week, but   many of its customers are calling it a price increase carefully cloaked as a discount, according to a published report Wednesday.

Outraged customers of the online retailer contend that when the company initiated the promotion, which applies to orders of two or more books, music CDs and videos, Amazon (AMZN: Research, Estimates) simultaneously modified prices of many items, hiking the prices on some goods and reducing them on others, the Wall Street Journal reported.

"I think Amazon is playing the same game that credit-card companies are playing, which is if you don't read the fine print, they've gotcha," the report quoted Glenn Fleishman, a former Amazon employee, as saying.

Amazon would not say how many prices it changed, but insists that the vast majority of the promotional items either decreased or stayed the same. It said customers are spending from about 4 to 9 percent less on the average order than they would have paid before the new promotion, the Journal said

"When we run the numbers, we expect in the end customers will pay less, " the report Bill Curry, an Amazon spokesman as saying.

Amazon has increasingly begun using free shipping orders to increase the profitability of the average customer order, the report noted, a move not that unusual as retailers struggle to recoup losses in an economic downturn.

Shares of Amazon.com gained 44 cents to $13.25 in trading Tuesday.

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