Amazon has agreed to pay a $1,000,000 administrative monetary penalty and $60,000 in Competition Bureau costs, following the Bureau's conclusion that Amazon did not substantiate its sale prices.
Vendors, lenders and lessors should take special care when setting and advertising prices and making cost of credit representations in their advertisements, particular over electronic messages.
Misleading pricing claims continue to be an area of high risk for enforcement by the Competition Bureau (Bureau), which is the Canadian regulator of deceptive marketing and advertising practices. Particularly at risk are deceptive pricing representations advertised over email, as these are subject to specific misleading advertising prohibitions under the Competition Act (Act) that were enacted as part of Canada's Anti-Spam Legislation (CASL). These email-specific obligations are in addition to the broader legal requirements applicable when sending commercial electronic messages in general, which are generally governed by CASL. Pricing compliance is further complicated in the context of regulated products, such as consumer advertising that triggers cost of credit disclosures.
The Amazon Case
The Bureau and Amazon.com.ca, Inc. (Amazon) have entered into a consent agreement regarding unsubstantiated sales prices. The Bureau alleged that Amazon had been comparing its sale prices to a market list price in Amazon's mobile app and online/email advertising. In the ads, Amazon's lower sale price was displayed next to the crossed out market list price, arguably creating the general impression that Amazon was offering the product at a discounted price. Under the terms of the consent agreement, Amazon has agreed to comply with legislative ordinary price provisions and prohibitions against making false or misleading representations, as described in more detail below.
Unsubstantiated sale prices fall under the Deceptive Marketing Practices division of the Act. Section 74.01 (2) of the Act prohibits any materially false or misleading representation to the public as to the ordinary sale price or regular price of a product. The Bureau's administrative position is that an ordinary sale price representation can be substantiated by meeting either the volume test or the time test (both as established by the Bureau). Notably, these prohibitions do not require any person to be actually deceived or misled by the price representations.
For the time test, the seller must be able to prove...