Amazon complies but is still fined $1,1M!

Amazon’s emails complied with three essential principles of the Anti-Spam Act:

1. Amazon sent messages only to those with whom it had consent,
2. Each email contained a straightforward and efficient unsubscribe mechanism,
3. Information to identify and contact the business (company name, mailing address and phone) was indicated.

So, why did Amazon agreed to pay a penalty of $1 million and the sum of $100,000 for certain investigative expenses incurred by a government regulator?

The devil is in the details

Although Amazon complied with the three top items of Canada’s Anti-Spam Law, there are still 53 pages of details and guidelines in the Act. In fact, after analysing the Act with marketing communications specialists and researchers at Université de Montréal’s Faculty of Law over the course of several months, we’ve identified more than 150 compliance risks for businesses.

For example, 99% of emails sent by a business are commercial, so they must comply with the Anti-Spam Act. This includes individual business emails. Do your emails have an unsubscribe mechanism? Your newsletters I’m sure do, but probably not your individual ones. Yet, it’s mandatory.

Canada’s Anti-Spam Law applies to four pieces of Legislation

The act is defined as follows: “An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the 1) Canadian Radio-television and Telecommunications Commission Act, 2) the Competition Act, 3) the Personal Information Protection and Electronic Documents Act and 4) the Telecommunications Act” (S.C. 2010, c. 23).

Many SMBs are simply not aware of the reach of this legislation. It’s not just an anti-spam act; it’s a true code of “electronic” conduct for businesses. Additionally, journalists and commentators, regularly talk about the CRTC’s role in enforcing this act, but often omit the Competition Bureau’s (and other regulatory bodies’) involvement.

For example, if you violate one of the Competition Bureau’s articles through an email communication, you will be fined, and heavily. Note carefully; fines can reach up to $10 million when a violation is done via email.

The case of Amazon

Canada’s Competition Bureau stated, “With the adoption of Canada’s Anti‑Spam Legislation, provisions were added to the Competition Act to provide additional tools for addressing false or misleading representations in all forms of electronic messages. The Bureau’s investigation into Amazon’s price advertising was made per these provisions.”

So, because Amazon was promoting prices, by referring to savings in relationship to list prices, they were fined.

Amazon complies but is still fined $1,1M for misleading pricing.

As indicated by the Competition Bureau, “Amazon often compared its prices to a regular price—or “List Price”— signaling 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.”

Although it’s primarily on Amazon.ca that these type of promotions are found, the Competition Bureau was able to convict Amazon because the company had communicated these promotions by email.

Not a first for the Competition Bureau

The case of Amazon is not the Competition Bureau’s first fine under CASL. They’ve already gone after car rental companies Avis and Budget for hiding certain mandatory fees in posted promotional pricing.

Additionally, the Competition Bureau said that it’s been documenting these situations since 2009 and fighting for years to prevent these types of practices. But it was only with the arrival of CASL that it finally had the means to do so.

The case of Avis and Budget pending before the Competition Tribunal was settled by the companies’ consent to pay $3M in fines and $250,000 in compensation to the Bureau. 

The mandatory compliance program is your only real protection

As these examples here illustrate, it’s almost impossible to be confident that you’ll never violate CASL, especially since many details of the Act are very vague and will only be clarified by actual cases in years to come.

It’s for this particularity that Parliament has provided in the Act a means to protect ones-self: if a business (or individual) can demonstrate that it has acted diligently to comply with the Act, it will be immune from sanctions. To “act diligently” means to have a compliance program that meets the CRTC’s eight requirements.