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Amazon Just Got Slapped With a $1 Million Fine For Misleading Pricing (recode.net)
Some deals are too good to be true. And, for Amazon, they will cost the company. From a report on Recode: A Canadian enforcement agency announced today that Amazon Canada will pay a $1 million fine for what could be construed as misleading pricing practices. The investigation centered on the practice of Amazon displaying its prices compared to higher "list prices" -- suggested manufacturer prices (MSRPs) designed as marketing gimmicks to make people think they are getting a deal, even though it's often the case that no shopper ever pays that price. "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," Canada's Competition Bureau said in a statement. "The Bureau determined that Amazon relied on its suppliers to provide list prices without verifying that those prices were accurate."
As long as people value the ephemeral bargain of the markdown, instead of the actual product value, this retail trick will never die.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
Uh...you broke Law 365, section A, code D! Now we get a million dollars! Muahahahah
Laugh all you want, but there is a bit of validity to the complaint.
If you compare Amazon.com (US) to Amazon.ca (Canada) you will see that Amazon.com is like a superstore, with tons of choices and multiple price points for new, used, refurb, etc., and Amazon.ca is like your corner convenience store, you're lucky if you have one choice and it may or may not be marked up higher than retail. Yes, consumers should comparison shop but it could be confusing for less experience online shoppers.
So brick and mortar stores do this ALL THE TIME.... they never cared. But Amazon does it. BAM!
This is also illegal in Canada and stores get fined for it as well up here. Maybe you're in the US, where consumer protections end where corporate rights start. Doesn't work that way up here though. It's the same reason why when you buy something on Steam in Canada, it's considered an owned product not a license.
Om, nomnomnom...
Canada's Competition Act makes it illegal to display an "ordinary price" (i.e. undiscounted) that is not representative of the actual price you'd be paying most of the time. Basically, if that price is only shown for a short time (the product is on sale almost all the time at a different price) or that very very few sales happen at that price (because it's way too high), then it's not considered the ordinary price.
Many many companies were guilty of that sort of stuff, so the regulation helps dealing with that. I know that as an American, you're not really used to consumer protection, but Canadian laws tend to favor the consumer a lot more.
They could just read the relevant sections of the Competition Act. The criteria used to determine an ordinary price are clearly stated there.
Amazon.com prices in the USA are the lowest or close to it. Amazon.ca is nowhere close, and are often completely fantastical.
Amazon.ca and Amazon.com are not very alike.
In Canada, we have laws regarding what you can post as a 'regular' price, in that it must be related to a retailer's actual sales history. The 'regular' price cannot be fabricated from whole cloth. This is distinct from declaring a price to be 'recommended retail price' or MSRP.
This is a pretty common requirement in the western world. The US is the only western country I'm aware of in which there's not a law against advertising an item as on sale when it's never actually been sold at a higher price.
In the UK (and most of Europe) for example, all price cuts must be advertised as being cut from a different price that you have sold the item at for a continuous 30 day period.
If that's the price the suppliers are giving them, why wouldn't it be accurate? Nobody forces people to buy from Amazon, there's an entire world wide web out there where they can compare prices and make their own determinations. Heck, there are even sites that will do the comparisons for you. Likewise, nobody ever pays MSRP on anything anyway; this sounds like a bogus complaint to me.
You are wrong. People rely on this information, which is why it is useful to do it. Amazon could and should easily show what the model normally sells for, but they only have an incentive to do it if forced to by regulation. Like how supermarkets should show price per unit even though anyone can do math if they take the time. In real life, you occasionally need regulation in order to incentivize behavior which is useful for society even though it hurts the person who does it. Otherwise you have lots of fraud, contracts are unenforceable, the economy becomes a whole lot less efficient, etc...
A lot of government regulations are implemented badly, and some are bad ideas, and there are too many--but there are really good reasons for some government actions.
Real lawyers write in C++
Yeah, I'm actually a bit surprised that so many people here just casually dismiss the fact that most American companies are engaging in pervasive and systemic deception on a regular basis. For the cynical among us, I'm sure people think that's true a lot of the time -- but prices are a pretty fundamental fact displayed by sellers (possibly THE fundamental fact). A lot of people here, for example, tend to be dismissive of ads, which they feel are mostly misleading and deceptive. I've seen a lot of posts arguing for their complete eradication. But displaying "fake prices" is okay?
Yes, it's common practice. Yes, it's not new. (I remember being shocked maybe 10-15 years ago when I went into a department store after probably not shopping in one for 5 years. And I couldn't believe how EVERYTHING was listed 50-70% off! I remember sales before that, sometimes exaggerating things, but it seems we took a turn somewhere in the past 20 years where this practice of inflating "retail price" became PERVASIVE.)
But just because it's common doesn't mean it's a good thing. While we're at it, can we do away with claims of "now with 30% MORE!" on product packaging unless that claim is followed explicitly by "more than... X" where X is a detailed explanation of what actually has less and when it had it?
How would it not? The whole premise of the free market is based on the buyer being able to determine tha value proposition of the offer. You can't do that when durability isn't apparent. For a while, brand made a decent(ish) proxy for that, but now most brands are just a shell around the no-name chassis used by multiple brands.
For example, 2 widgets priced at $30 and $35. The $30 one is made of substandard parts and will fail in a year. If the $35 one is made with quality parts, it will last 5-10 years. Simple choice. However, in the real world there's also the $40 one which is the same chassis as the $30 one but with a 'better' branding on the shell. There's also the $50 one that used to be made with high end components and would last a lifetime, but last year it switched to mid-grade parts and will last about 4 years.
If you don't have perfect information, you can only choose based on price so when it turns out to be crap, you lose as little as possible. So the $30 crappy one it is. No point in selling one that will last a lifetime at twice the price, nobody will believe it, so make one with the crappiest components known to man and sell at $25 if you actually want to stay in business. Every once in a while, use better components is a run so you can spread some dis-information around.
Likewise, competitive pricing for the same product only works when you know what other people are charging for the product.