Amazon will pay C$1.1 million to settle a two-year investigation launched by a Canadian regulator on misleading pricing.
The fine, along with the company's agreement to change its pricing methods in Canada, concluded the case that alleged Amazon made unsubstantiated claims on the savings that customers can receive when buying certain products on the online retail platform.
Canada's Competition Bureau Finds Amazon Guilty
The Competition Bureau of Canada, after an investigation that took two years, found that the pricing method of Amazon can be construed as misleading.
The investigation focused on Amazon's practice of comparing the prices of its products to other listings with higher prices to suggest the customers would be getting a bargain when purchasing the particular item.
The Competition Bureau found that Amazon's practice created the impression that the listed prices for products sold through the Canadian website of the online retail company were lower than what the prevailing prices for the items were in the market.
In addition, the bureau found that Amazon relied on suppliers to provide them the list prices, without making efforts to verify the accuracy of the prices.
Amazon Now Making Amends
Amazon has already started making amends for its misleading pricing practices, now taking steps to make sure that the market prices that are being listed for products on the Canadian version of its platform are checked for accuracy.
"We're pleased that Amazon has put procedures in place to validate list prices received from its suppliers," said Canadian competition commissioner John Pecman, adding that this will ensure customers are able to access accurate information and are not subjected to sale claims of savings.
In addition to the change in its pricing practices, Amazon has been charged to pay a C$1 million penalty and an additional C$100,000 for legal costs, bringing up the total damage to the company to C$1.1 million.
The Competition Bureau hinted that Amazon's punishment might have been worse, but due to the cooperation provided by Amazon in the case's investigation and the company's effort in addressing the concerns of the bureau, the online retail company received a more favorable treatment.
Amazon Pricing Issues
The misleading pricing case that Amazon went through in Canada is not the only instance that the company has faced scrutiny for its pricing methods. Amazon has been on the receiving end of several lawsuits that allege the company tampers list prices, or fails to check for their accuracy.
In September of last year, a report claimed that the pricing algorithm of Amazon does not give its customers the best prices by default, with the website instead highlighting listings of Amazon's own products or items from companies under the Fulfilled by Amazon program.
In May 2016, Amazon ended its price protection policy that allows customers to refund items that they bought from the online retail platform in case the product's price suddenly drops after it was purchased. The move, which Amazon said was made in the name of customer security, was launched without fanfare, which could have alienated some of Amazon's most loyal customers.
