The ACCC is taking popular online retailer, Kogan, to Federal Court for alleged price hiking before discounting, creating false and misleading promotions.
The regulatory body is seeking penalties, injunctions, declarations, corrective notices and costs from Kogan in relation to a promotion conducted for four days in June last year.
“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,” ACCC commissioner Sarah Court said.
According to the ACCC, Kogan “made false or misleading representations about a 10 per cent discount promotion, in breach of the Australian Consumer Law.”
The ACCC said between 27 and 30 June 2018, Kogan ran an online promotion where consumers could obtain a 10 per cent discount on most of its products by using the discount code ‘TAXTIME’. The promotion was held ahead of the end of the 2017/18 financial year.
Kogan published this promotion on its website and via text messages and emails to consumers.
The ACCC alleges that Kogan’s advertisements were false or misleading because Kogan increased the prices of more than 600 of its products immediately before the promotion. In most cases prices increased by at least 10 per cent.
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, Kogan reduced the prices of the affected products shortly after the promotion ended, many back to their pre-promotion prices, according to the ACCC.
“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings,” Court said.
Kogan hits back
Meanwhile, Kogan has hit back at the ACCC, saying 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,” Kogan said.
“Kogan.com’s marketing collateral in connection with the promotion was carefully considered and was drafted specifically to avoid the type of confusion alleged by the ACCC. Kogan.com at all times made clear that the price reduction applied at the time of checkout.
“At checkout all customers were made aware of the full price they would pay for the product and the price reduction that would be achieved by using the discount code. There was no confusion caused.”
Additionally, Kogan said it cooperated fully with the ACCC throughout its investigation and explained in detail the above facts and matters.
“Kogan.com is disappointed that the ACCC has nevertheless decided to issue proceedings against Kogan.com - a highly procompetitive company that benefits consumers.
“Our aggressive discounting, quality product range, excellent delivery standards and innovative promotions sets us apart in a highly concentrated market. We will of course continue to ensure that we maintain these excellent standards for the benefit of our valued customers.
“Kogan.com is unashamed about its obsession with constantly driving down prices, making the most in-demand products and services more affordable for Australian shoppers. Our track record in being the go-to destination for great value and low prices speaks for itself.
“Kogan.com did not gain any material financial benefit as a result of the promotion. Kogan.com does not expect any adverse change to its ongoing promotional activities as a result of this matter.”
Kogan.com sells a wide variety of goods including consumer electronics, furniture and toys. Kogan.com has over 1.4 million active customers.
The ACCC 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.
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