May 5, 2011, 4:05 PM

Amazon squares off with college bookstores over textbook prices

The e-retailer sues over complaints that its textbook ads are misleading.

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Amazon.com Inc. has filed a federal court lawsuit against the National Association of College Stores Inc., a trade group of 3,100 college and university bookstores, responding to a complaint by NACS that Amazon’s textbook ads are misleading.

On one point both sides agree: The Internet has given students many more options about where they can buy textbooks, leading to aggressive online price competition.

The National Association of College Stores got the dispute rolling March 25 when it sent a letter to the Better Business Bureau, claiming that Amazon’s textbook ads were misleading. The association claims Amazon could not prove its claims that it can save students up to 30% off new textbooks and up to 90% off used ones. The bookstore group noted that the Better Business Bureau code generally requires that when a merchant says shoppers can save “up to” a given percentage that at least 10% of the products offered are available at that large a discount.

The association further complained that Amazon was lying when it said students could get up to 60% back when selling used textbooks to Amazon, because Amazon pays for those used books with Amazon gift cards, not cash.

NACS concluded its complaint by asking the National Advertising Division of the Better Business Bureau to investigate “the truth and accuracy” of Amazon’s advertising claims.

Amazon, No. 1 in the Internet Retailer Top 500 Guide, responded Tuesday with a lawsuit filed in the U.S. District Court for the Western District of Washington.

“Amazon strongly disputes NACS’s position that there is anything false or misleading to consumers about the better textbook prices it offers,” the retailer says in its lawsuit.

Amazon argues in the suit that NACS member bookstores are trying to maintain their profit margins, which Amazon says are typically 20-25% when they don’t face online competition. The e-retailer further contends that about 1,500 college bookstores are owned by three companies that have a strong interest in keeping textbook prices up: Follett Higher Education Group, No. 58 in the Internet Retailer Top 500 Guide, Barnes & Noble (41) and Nebraska Book Company. Those three retail chains are all members of NACS.

The lawsuit also notes that the general counsel of NACS wrote to Amazon Feb. 2 “and informed Amazon that NACS was troubled by and therefore investigating the low prices Amazon was offering to college students on the sale of new textbooks.” If Amazon did not justify its pricing policies, NACS threatened a legal challenge to Amazon’s claim that it offered textbooks at up to 30% off list price, the lawsuit says. Amazon goes on to say that it “informed NACS that it had proper support for its pricing claims, but that it would not discuss or share its pricing or other competitive information with NACS.”

Amazon’s lawsuit asks the court to declare that its pricing claims do not violate the federal Lanham Act, a trademark protection law that also bars misleading commercial advertising.

NACS responded to Amazon’s filing with a statement that Amazon had chosen to go public with a complaint that NACS had filed confidentially, as required by the Better Business Bureau’s National Advertising Department. The NACS statement goes on to say, “NACS was not trying to achieve any type of public ‘win’ with its filing, but to promote a level playing field by eliminating unsubstantiated advertising claims. NACS has not yet been served with the complaint, but will respond to it in due course.”

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