ACCC takes Kogan to court for misleading ads

Written on the 23 May 2019 by Business News Australia

ACCC takes Kogan to court for misleading ads

A 10 per cent discount promotion has landed Kogan in hot water with the Australian Competition and Consumer Commission (ACCC).

The consumer watchdog has taken the online retailer to the Federal Court, alleging that Kogan made false or misleading representations about a 10 per cent discount promotion.

The situation in question saw the retailer run an online promotion in June 2018 where customers could get a 10 per cent discount on most of its products by using the code "TAXTIME" at the checkout.

The watchdog alleges that this promotion was false or misleading because Kogan actually increased the prices of more than 600 of its products immediately before that promotion, in most cases by 10 per cent.

"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," says ACCC Commissioner Sarah Court.

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.

This is not the first time the ACCC has taken Kogan to task for alleged price altering conduct.

In 2016 Kogan was ordered to pay a $32,400 penalty for engaging in effectively the same behaviour. Except in this situation the retailer was changing the prices of just three products and offering a discount of 20 per cent.

Similarly, in 2009 Kogan was caught out pretending to offer discounts on prices that had not been offered at a higher price before. Kogan's newspaper advertisement and website used price comparisons such as Now $X (Save Y%) and save over $X. The savings were based on an estimated average price a consumer might pay for a product with similar specifications from another manufacturer.

In that instance the retailer simply got off with a slap on the wrist and made undertakings to improve its advertising behaviour.

Shares in Kogan are down 6.56 per cent to $5.84 per share at 3.23pm AEST.

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