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Amazon.com Owns Up to a Mistake

Giant e-tailer Amazon.com said it made a mistake in implementing a random price test for some products, and is refunding some money to nearly 7,000 customers who got less than the best deal on certain DVDs.

The company, which took heat from a few privacy advocates several weeks ago after disclosing in a new privacy statement the amount of customer tracking it does, said that recent news reports "incorrectly characterized a recent Amazon.com random price test as a test based on customer demographic information. These reports were incorrect and were not based on the facts."

In its statement, the company said that it had varied the discount levels on some products on a totally random basis, without respect to customer demographic information. The purpose of the test was to determine how much sales are affected by lower prices, Amazon said.

"In retrospect, this random testing was a mistake, and we regret it because it created uncertainty and complexity for our customers, and our job is to simplify shopping for customers," Amazon said.

The company added that it has changed its policy "to protect customers should we ever do random price testing again (and currently we have no plans to do so). Now, if we ever do such a test again, we'll automatically give customers who purchased a test item the lowest test price for that item at the conclusion of the test period -- thereby ensuring that all customers pay the lowest available price."

Amazon said it has now refunded an average of $3.10 to each of 6,896 customers as a result of the random price test on DVD sales. Amazon said the five-day test on 68 titles had offered random discounts of between 20 percent and 40 percent in an effort to chart the impact of pricing on sales.

"We've never tested and we never will test prices based on customer demographics," said Amazon.com founder and CEO Jeff Bezos. "What we did was a random price test, and even that was a mistake because it created uncertainty for customers rather than simplifying their lives. The policy we put in place two weeks ago removes that uncertainty."