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Scoopon fined $1m after Federal Court rules company misled consumers

ScooponGroup buying website Scoopon has been handed a record fine of $1 million for making false or misleading representations to both consumers and business.

The Federal Court this afternoon handed down the fine after the Australian Consumer and Competition Commission (ACCC) launched a court action against the website alleging it had engaged in misleading and deceptive conduct in July.

The Federal Court found Scoopon contravened the Australian Consumer Law by making false or misleading representations to consumers about their refund rights and the price of goods advertised, and for telling businesses there was no cost or risk involved in running a deal with Scoopon and that 30 per cent of vouchers sold would not be redeemed, when this was not the case.

“The ACCC acknowledges Scoopon’s cooperation in resolving the matter by consent, which has enabled a more timely outcome to be reached,” said chairman Rod Sims in a statement.

“The ACCC understands that Scoopon has worked to improve its systems and processes which gave rise to this conduct to meet its obligations under the ACL. However, this penalty serves as a warning to other businesses in the industry to improve their practices or face action from the ACCC.”

As part of the order the business faces “injunctions restraining Scoopon and its employees from making similar misleading representations for a period of two years”; pays an agreed amount of the ACCC’s costs; and agrees to further develop and enhance its existing compliance program.

Scoopon was also ordered, as part of a community service order, to prepare for and hold an educational seminar on consumer law for other online group buying traders who are members of the Association for Data-driven Marketing & Advertising (ADMA).

In a statement, this afternoon, Scoopon acknowledged it breached consumer law. “Scoopon did not intentionally set out to mislead consumers the ACCC identified instances where we regretfully failed to meet our own, consumer’s and businesses’ high expectations,” said the company.

“Following discussions with the ACCC, Scoopon has voluntarily accepted orders which include additional measures to improve compliance. Building on measures we’ve already introduced, Scoopon is re-training our team members, has introduced additional compliance roles and offered to work further with the group buying industry to implement stricter compliance standards.”

The ACCC said it would continue to monitor the group buying sector. “Online competition and consumer issues are a priority for the ACCC. Online traders must understand their obligations are the same as traditional retailers’ and must not mislead customers or other businesses. The ACCC will continue to take further action in this area to improve business practices and protect small businesses and consumers,” said Sims.

Earlier this year the Association of Data-driven Marketing  and Advertising (ADMA) released a revised Code of Practice in a move designed to help restore consumer confidence in the sector. CEO of ADMA Jodie Sangster noted the breaches had occurred before the code was introduced.

“The important point here is that the case brought by the ACCC relates to behaviour that were prior to the Code being introduced”, said Sangster.

“All of the instances are from more than two years ago. Those events all occurred when group buying was quite new and it was a point when there were a lot of complaints but the Code was introduced to address exactly these problems. Since then the level of complaint has dropped significantly.”

Nic Christensen 

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