After a two-year investigation by the Competition Bureau, Amazon Canada has been fined $1 million CAD for misleading pricing practices.
The web giant will pay $1 million in penalties and $100 thousand towards the Competition Bureau’s costs, as part of an agreement regarding the Bureau’s probe into its pricing practices on its Canadian website.
Amazon often displays its prices in comparison to a regular “list price,” giving consumers the impression that they were paying lower than the prevailing market price.
The Bureau’s investigation determined that Amazon.ca relied on its suppliers to provide the list price without verifying that these prices were accurate. As part of the Competition Act, the Bureau demands that consumers are not misled by references to inflated regular prices.
“Amazon relied on its suppliers to provide list prices without verifying that those prices were accurate.”
The savings were reportedly repeated on Amazon.ca, in Amazon apps, in online advertisements, as well as in emails sent to customers.
“Amazon often compared its prices to a regular price — or ‘List Price’ — signalling attractive savings to consumers. The Bureau’s investigation concluded that these claims created the impression that prices for items offered on www.amazon.ca were lower than prevailing market prices. The Bureau determined that Amazon relied on its suppliers to provide list prices without verifying that those prices were accurate,” said the Bureau in a statement released earlier.
It’s important to note that over the course of the investigation however, Amazon amended its policies and procedures to ensure that they do not infringe on the Competition Act.
The Bureau opened the investigation into Amazon Canada in May of 2014 and closed it this past year in March of 2016.
“Consumers are naturally attracted to claims that they will save money. We’re pleased that Amazon has put procedures in place to validate list prices received from its suppliers. This ensures that consumers are provided with accurate information and not misled by savings claims. This agreement was reached through collaborative efforts and reflects an innovative approach we call shared compliance,” said John Pecman, the Commissioner of Competition, in a statement.
This announcement comes shortly after the Competition Bureau concluded its investigation of smartphone giant Apple regarding whether the company used its “dominance” to sway retailers into offering fewer discounts to competitors.