The brand violated spam laws after sending more than 370,000 emails containing commercial content, including shipping updates and promotional material, without an unsubscribe option, an Australian Communications and Media Authority investigation found.
The watchdog found Lululemon mischaracterised the service messages, including order confirmation emails, that had a clear marketing purpose between December 2024 and January 2025.
"In this case Lululemon sent service emails such as a shipping updates that also contained sales material and direct links to promotions," authority member Samantha Yorke said.
Lululemon has paid the $703,000 fine, and says it takes its responsibilities seriously.
The watchdog described the breach as easily avoidable.
"Businesses need to understand that marketing messages must have an unsubscribe option and the simplest way to comply is to keep transactional or service messages separate from sales content and links," Ms Yorke said.
"This is the fifth enforcement action the ACMA has undertaken in the last 18 months against businesses that have incorrectly treated messages as non-commercial even though they contained or had links to clearly commercial material."
In 2024, the Commonwealth Bank paid a $7.5 million penalty after it sent more than 170 million emails that did include a way to unsubscribe.
Online gambling provider PointsBet has also been hit with a $500,000 penalty after sending 700 emails containing a direct link to its betting products without including an unsubscribe function in 2023.
Telstra paid a $600,000 penalty after it sent close to 10.5 million text messages that did not comply with spam laws.
Lululemon was previously fined more than $32,000 in 2017 for falsely telling customers they were not entitled to refunds or replacements.
The Australian Competition and Consumer Commission alleged the website falsely stated in ads for sale products that consumers weren't entitled to a return, remedy, refund or exchange of a product under any circumstance.
The athleisure brand has entered into a comprehensive court-enforceable undertaking committing it to an independent review of its spam rule compliance, according to the watchdog.
The business will need to report to the ACMA on the implementation of recommended improvements.
A Lululemon spokesperson told AAP the company was taking all applicable legal and regulatory requirements very seriously.
"We have worked cooperatively with the Australian Communications and Media Authority to address their findings," the spokesperson said.
"We have completed a thorough review of our practices for communicating with our guests and have made updates to our standard guest journey emails, including our order confirmation and delivery notifications to ensure ongoing compliance."
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