When the National Association of College Stores Inc., a group of over 3,000 college bookstores, complained that Amazon (NASDAQ: AMZN) was misleading customers with their textbook ads – Amazon responded by filing a federal court lawsuit.

In February, NACS wrote to Amazon and explained they were troubled by the lower prices Amazon was advertising on textbooks. It requested that Amazon justify it’s pricing, or NACS would have to legally challenge the claim. Amazon responded to the letter that it has proper support for it’s pricing, but that the company would not share competitive information like pricing strategies with NACS.

Amazon featured textbook ads that advertised textbook savings up to 30% on new books and up to 90% on used books. The National Association of College Stores disputed this with a letter to the Better Business Bureau on March 25th, asking for an investigation of Amazon’s “truth and accuracy” in their advertising claims. The association claims Amazon could not prove the savings they advertise. They also complained about Amazon’s claim of giving students up to 60% back when they sold their used textbooks to Amazon – since Amazon only pays for the used books with gift cards to Amazon.com rather than cash payments.

In response to the complaints, Amazon filed a lawsuit with the U.S. District Court for the Western District of Washington, indicating that they do not agree with NACS, and that there is nothing misleading or false about their better textbook prices. Amazon believes NACS is simply attempting to maintain their 20-25% profit margins, but are having difficulty when faced with online competition and better prices.

After Amazon filed the lawsuit, The National Association of College Stores responded with a statement. They said they had filed their complaint with the Better Business Bureau confidentially and that they were not looking for a public “win” from the filing. They simply wanted to eliminate any false or misleading advertising in an effort to level the competition between Amazon and college bookstores. NACS indicates they have not received the complaint as of yet, but will respond when they do.

 
Reference:

http://www.internetretailer.com/2011/05/05/amazon-squares-college-bookstores-over-textbook-prices

 

Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.