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Kogan’s tax time promotion broke the law, court rules in ACCC victory

Kogan misled consumers with a 2018 tax time 10% off ‘sale’ that saw 600 products cost the same as, or more than, their pre-promotion price, the Federal Court has ruled.

The Australian Competition and Consumer Commission (ACCC) began court proceedings against the retailer in May last year alleging it made false and misleading representations when advertising the discount code.

Between 27 and 30 June 2018, Kogan – which has 1.4m active customers and sells a range of items including electronics, furniture, and toys – advertised on its website, in SMS messages, and in emails sent to more than 10m people that consumers could use the code ‘TAXTIME’ to get 10% off at checkout.

Kogan advertised its ‘TAXTIME’ 10% promotion after raising the prices of 600 items immediately before the sale began

But the court found that, in fact, Kogan upped the prices of more than 600 products immediately before the sale, most by at least 10%. After the promotion ended, the items reverted to their pre-sale prices.

ACCC chair Rod Sims said the watchdog began legal action because “we were concerned that the advertised price reductions were not genuine savings”.

“Many consumers who took up the offer on one or more of the 600 or so products in many cases actually paid the same as, or more than, what they would have paid immediately before and after the promotion,” Sims said.

“All businesses must ensure that their advertisements do not mislead consumers about the nature of a promotion, and that any promised savings are genuine.”

Towards the end of the promotion, Kogan enticed consumers further with advertisements that included phrases like “48 hours left!” and “Ends midnight tonight!”.

In 2009 and 2016, the ACCC took legal action against related Kogan entities for allegedly similar behaviour regarding pricing.

Now that the court has handed down its ruling, a further hearing will be conducted to determine the consequences Kogan will face. The ACCC wants the court to enforce declarations, injunctions, financial penalties, and correct notices, and for Kogan to pay its legal costs.

In May, the companies behind Voltaren were ordered to pay $4.5m for making misleading marketing claims after the ACCC pursued a legal remedy. The month before, the ACCC won a court case that saw STA Travel fined $14m for misleading advertisements.

At the start of the year, the watchdog proved that Trivago also broke the law and misled consumers. And at the end of 2019, the ACCC began court proceedings against Google for its use and collection of location data. It continues its ongoing inquiries into the digital platforms, including Google, and the ad tech supply chain.

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