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Amazon Ordered to Pay $1.1 Million Fine for Misleading Advertising

Amazon Ordered to Pay $1.1 Million Fine for Misleading Advertising

By Simon Hung

Savings -- 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!

33 Comments

    • 1million ... whats that? says amazon
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    • Good! Well deserved.

      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??
    • Report Post
    • agreed, well deserved

      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 ?
    • Report Post
    • Cas77 wrote: So now who gets this $1 million?
      TFA, "The penalty will be paid to the Receiver General for Canada." So it goes into general revenue. I suppose that's better than a class-action where the lawyers are the real winners and we get the crumbs.
      Oh then Amazon will have to raise prices to make sure this fine doesn't affect their bottom line for their shareholders.
      $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.
      oh wait...how did we consumers win exactly??
      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.
    • Report Post
    • @bylo It's all about knowing your prices and the price history haha. I don't go by the list price b/c it is always inflated just like how CT has crazy regular prices and the sale prices makes it look like a deal.
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    • bylo wrote: The investigation and fine are meant as a warning to the entire industry. We'll have to see how effective it ends up being.
      So the $1.7M fine Forzani Group paid a while back and the $3.5M Michael's was fined 2 years ago FOR THIS EXACT SAME THING sure was effective in scaring the crappola out of these retailers and the industry...It's also known that CTC is under investigation and rightly so. It's a big **** joke and that was my point. The Competition Bureau is useless and a waste of resources, they like to toot their own horn and fine for pocket change to make themselves look important in the eyes of the average Canadian every couple years...while we're ultimately the ones paying the price both ways.
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    • Groupon next please.
    • Report Post
    • Damn, 1.1 million dollars is a little steep isn't it?
    • Report Post
    • Mok122cobra wrote: Damn, 1.1 million dollars is a little steep isn't it?
      no, not at all, in fact.

      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
    • Report Post
    • I already shop less on Amazon since 6 months back due to changes in shipping time/minimum order and return policy changes.
    • Report Post
    • We all knew that lol.

      Canadian tire has been doing that for decades now.
    • Report Post
    • Waiting on Best Buy's turn. Fake sales should definitely be deemed misleading.
    • Report Post
    • how about the gap/banana republic/old navy? i get an email from them every single day with an offer of 40% off. if anyone buys from them at full price they have problems...
    • Report Post
    • Wait so Amazon got in trouble for comparing the store's list price to their own price? Is that not the store's fault for marking up their list price so high?
    • Report Post
    • DealCanuck wrote: Canadian tire has been doing that for decades now.
      Deriot wrote: Waiting on Best Buy's turn. Fake sales should definitely be deemed misleading.
      jonnyk9 wrote: how about the gap/banana republic/old navy? i get an email from them every single day with an offer of 40% off. if anyone buys from them at full price they have problems...
      Almost all major retailers do it. IIRC Sears got busted over mattress "sales" based on list prices that no one ever paid. Then there's the auto industry with its flim-flam over stuff like list prices, invoice prices, dealer kick-backs, etc.

      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.
    • Report Post
    • The Bay is horrible for this. I would never pay full price for anything there.
    • Report Post
    • Good job in fining them, Dr.Evil. LOL

      Gotta shop around, never trust those "sale" prices. Winners/Marshalls got caught for this as well.
    • Report Post
    • Cas77 wrote: Good! Well deserved.

      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??
      Don't be dumb, misleading advertising doesn't help the consumers at all.
    • Report Post
    • Amazon is a 384 Billion dollar company as of this morning. Losing 1 million to them is nothing.

      Imagine if you had $384,000 in your bank account, and you paid a dollar for at a tow booth.
    • Report Post
    • Regular price $3499.99

      Buy today $699 only!

      But seriously, $1 million is nothing to Amazon.
    • Report Post
    • Please tell me how are they any different from winners? Why is winners not getting fined.
    • Report Post
    • implyingdoesitforfree wrote: Don't be dumb, misleading advertising doesn't help the consumers at all.
      Don't be ignorant. Not everyone wants to pay the government to show them how to put their socks on in the morning.
    • Report Post
    • bylo wrote:
      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.
      That's what i'm thinking.
      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.
    • Report Post
    • Amazon gives away way more than $1.1M in "savings" every day to customers. :D
    • Report Post
    • Amazon getting fined about $1 million, while making $107 billion....is approximately the same as you getting fined $100 while earning $100,000 income.
    • Report Post
    • DealCanuck wrote: We all knew that lol.

      Canadian tire has been doing that for decades now.
      Ha I was going to Say when's Canadian Tire's turn.

      Also waiting for the conspiracy theorists to say this brick and mortar stores teaming up with the CB to slow down ecomm.
    • Report Post
    • 1 million dollars? pocket change from Amazon?
    • Report Post
    • Of all the scams I deal with on a daily basis, this one is the least of my worries. When a 29 dollar item is 596 on amazon, we know it is BS.
    • Report Post
    • Cas77 wrote: Don't be ignorant. Not everyone wants to pay the government to show them how to put their socks on in the morning.
      How is it BAD to punish people for being misleading? I'm against the nanny state but there should be an incentive to be honest.
    • Report Post
    • User477919 wrote: ncix next LOL
      I really hope these guys get fined, as a consumer I find them constantly misleading their prices and "sell" bs
    • Report Post
    • I only buy groceries from Amazon because I know their "regular" prices. I just received Ritz bits Sandwiches yesterday. I bought 2 boxes for less than $3. (even cheaper than walmart , no frills etc)
    • Report Post
    • Online computer retailers next, please.

      NCIX & Canada Computers do this exact thing. That's how they can "look" like they are having constant sales every Wednesday.
    • Report Post