Amazon Ordered to Pay $1.1 Million Fine for Misleading Advertising
By Simon Hung
January 12, 2017Savings -- it’s a metric many shoppers use to evaluate a deal and it’s this very notion that has gotten Amazon into trouble with the Canadian Competition Bureau, as the online retailer has been fined $1 million for using misleading advertising practices, plus another $100,000 towards the Bureau’s investigation costs.
The two-year investigation, conducted between May 2014 and May 2016, found that Amazon often compared their retail prices to a list price in order to give the impression of offering steep savings. In reality, the list price was often unverified and provided by suppliers, misleading shoppers into believing that Amazon’s savings were more substantial than their competitors -- per the Competition Act, comparisons between a regular price and a sale price must be accurate.
A common example would be watches and jewellery, as the list price is usually marked up significantly and it was not uncommon to see some products with thousands of dollars in alleged savings.
Amazon has agreed to pay the fine and is in the process of making changes to how they display prices to ensure better accuracy and validity. The changes are being made on both Amazon.ca and Amazon.com.
This isn’t the first time a Canadian retailer has been fined for misleading consumers, as the Forzani Group (parent company of Sport Chek) was fined $1.7 million in 2004 for using similar misleading tactics while Michael’s was fined $3.5 million in 2015 after the crafts store did not ensure that custom frames were offered for sale before promoting them at discounts.
It remains to be seen if this fine will hurt Amazon’s brand, as the ruling should theoretically give consumers more confidence when shopping with the online giant. Beyond Amazon, the Competition Bureau hopes this fine sends a clear message to other retailers that unsubstantiated savings will not be tolerated -- click here to view the complete press release about the ruling on the Government of Canada website.
Will you be more vigilant on Amazon in the future? Maybe you're already savvy enough not to be fooled by these tactics? Let us know if this ruling will change your shopping habits on Amazon by leaving a comment and voting in our poll!
Showing 33 Most Recent Comments
View allNCIX & Canada Computers do this exact thing. That's how they can "look" like they are having constant sales every Wednesday.
Also waiting for the conspiracy theorists to say this brick and mortar stores teaming up with the CB to slow down ecomm.
I think Amazon was an easy target because the guy investigating didn't have to get off the couch whereas he'd actually have to go to a Canadian Tire/Winners/every other brick and mortar retailer.
Buy today $699 only!
But seriously, $1 million is nothing to Amazon.
Imagine if you had $384,000 in your bank account, and you paid a dollar for at a tow booth.
Gotta shop around, never trust those "sale" prices. Winners/Marshalls got caught for this as well.
Still it's good for the Competition Bureau to single out the worst offenders for a public wrist-slapping. Even if it doesn't change retailers' behaviour at least it will keep driving home the message to consumers that "list price" is meaningless and the only price that matters is the one you pay at the cash register.
Canadian tire has been doing that for decades now.
The figure may be a lot for you. But for big companies, it is a drop in the bucket, merely a symbolic occurence.
btw they have canadian yearly revenues of over $B 1.5
$1M to Amazon is like a cup of coffee is to you or me. It's just a message, not a financial deterrent. The hit to their reputation for low prices will likely cost them more than the $1M fine.
The investigation and fine are meant as a warning to the entire industry. We'll have to see how effective it ends up being.
P.S. I'm amazed that people seem to rely on "list price" to assess the "goodness" of a "deal." That game is one of the oldest in the annals of marketing gimmicks.
1.1 M$ will pay for the investigation alone i guess haha
are they just going to remove the 'list price' label ? Or will they adjust their pricing algorithm ?
So now who gets this $1 million? Us customers who were misled into thinking the deal was better than it actually was or the government so they can somehow waste it like all the other money. Oh then Amazon will have to raise prices to make sure this fine doesn't affect their bottom line for their shareholders.
oh wait...how did we consumers win exactly??