The Federal Court has found online retailer Kogan Australia Pty Ltd (Kogan) breached the Australian Consumer Law by making false and misleading representations about a tax time sales promotion, in proceedings brought by the ACCC.
Kogan ran the online promotion from 27 to 30 June 2018, advertising to consumers that they could use the code ‘TAXTIME’ to reduce prices by 10 per cent at checkout. The promotion was advertised on Kogan’s website, in emails it sent to more than 10 million consumers, and in SMS messages to more than 930,000 consumers.
Towards the end of the promotion, Kogan’s email advertisements also included statements like ’48 hours left!’ and ‘Ends midnight tonight!’ to entice consumers to make a purchase during the sale.
The Court found that the advertisements conveyed false or misleading representations because Kogan had increased the prices of more than 600 of its products immediately before the promotion. In most cases the prices of these products had been increased by at least 10 per cent. Kogan had also reduced the prices of these products shortly after the promotion ended, many back to their pre-promotion prices.
“We brought this case because we were concerned that the advertised price reductions were not genuine savings,” ACCC Chair Rod Sims said.
“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.”
“All businesses must ensure that their advertisements do not mislead consumers about the nature of a promotion, and that any promised savings are genuine,” Mr Sims said.
A hearing on relief, including penalties, will be held at a later date. The ACCC is seeking declarations, injunctions, pecuniary penalties, corrective notices and costs.
Background:
Kogan.com (ASX:KGN) is an online retailer with over 1.4 million active customers which sells a wide variety of goods including consumer electronics, furniture and toys.
In May 2019, the ACCC launched legal proceedings, alleging Kogan made false or misleading representations about a 10 per cent price reduction promotion.
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.
An example of Kogan’s website promotion is below:
