Amazon have just paid a cool million Canadian dollars to make a price advertising case go away. On top of the fine they paid another $100,000 towards the Canadian Competition Bureau‘s costs.
It’s the normal story, on their Canadian site Amazon often compared selling prices to a regular price or “list price” making it appear as if consumers were making massive savings. In reality savings against prevailing market prices were no where near as much as might seem at first glance.
These pricing representations were often accompanied by specific “You Save” claims that set out a dollar amount of savings and a percentage discount off of the list price, such as “You Save: $10.00 (25%)
The Competition Bureau acknowledged that often Amazon relied on suppliers to provide list prices without verifying that those prices were accurate.
Amazon has already made changes to the way it advertises list prices on its Canadian website to accurately represent the savings available to consumers. The policies put in place by Amazon have had an effect beyond the Canadian website, including on savings claims for products sold on amazon.com.
John Pecman, Canadian Commissioner of Competition said “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“.
Shared compliance it may be, but it still cost Amazon $1.1 million Canadian dollars. A drop in the ocean this is hardly even a rounding error on Amazon’s balance sheet such is the size of the income, but it’s a salutatory lesson to anyone making unusual RRP and discount claims on their own website. Advertising rules around the world may vary, but just about ever country is starting to crack down on pricing claims if they can’t be backed up.