Kogan under fire from the ACCC for a misleading discount promotion
The ACCC has begun proceedings against Kogan in the Federal Court on the basis that the online retailer made false or misleading claims about a 10% discount promotion.
The Commission alleges that an online promotion run by Kogan between 27 and 30 June 2018 was false or misleading as the retailer raised the price of more than 600 products immediately before the promotion, by at least 10% for the majority.
The ACCC allege Kogan mislead consumers with its 10% TAXTIME discount
ACCC commissioner Sarah Court said the change in pricing meant the retailer delivered a false promise of a discount to consumers.
“We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual prices. In fact, Kogan had inflated product prices which we say created a false impression of the effective discount,” said Court.
The promotion, which claimed to give consumers 10% off using the code ‘TAXTIME’ was published on the Kogan website and sent via text message and email to the retailer’s database.
Towards the end of the promotion period, Kogan’s email advertisements used statements such as “48 hours left!” and “Ends midnight tonight!” which the ACCC alleges gave the impression that consumers only had a limited time to purchase at the “discounted” prices.
However, according to the ACCC, the retailer reduced the price of the affected products shortly after the promotion ended, returning many to their pre-promotion prices.
“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings,” said Court.
In a statement to the ASX, Kogan refuted the ACCC’s claims.
“At the outset, Kogan.com wishes to make clear that it strongly denies the allegations and will defend the proceedings. The proceedings commenced by the ACCC ignore critical facts and matters which are in Kogan.com’s view highly relevant in assessing the overall impression of the promotion by consumers who are intimately familiar with online retailing and how a discount code functions,” said the statement.
The statement goes on to say that the wording of the promotion was incredibly clear regarding the discount being related to the cost at time of checkout and that consumers were made clear during the transaction of the cost of the item and the discount applied.
“There was no confusion caused,” said the statement.
The ACCC is seeking penalties, injunctions, declarations, corrective notices and costs from Kogan. The commission has previously taken enforcement action against other related Kogan entities in 2016 and in 2009 for allegedly engaging in pricing conduct which raised similar concerns.
Kogan claims in the statement to the ASX that it made no material financial benefit as a result of the promotion and that it is “disappointed” that the ACCC has decided to pursue proceedings against Kogan, “a highly pro-competitive company that benefits consumers”.
