Online retailer Kogan has broken Australian Consumer Law after making false and misleading representations about a tax time promotion in 2018, with a court ruling in favor of a submission by the Australian Competition and Consumer Commission.
This is the second time the business has been targeted for misleading customers, after it was fined in 2016 and warned in 2009.
At the time Kogan had advertised the tax time sale with a checkout code, TAXTIME, that would take ten per cent off of a customers checkout. In actuality, the business had increased the price of more than 600 of its products by “at least ten per cent”, and returned the prices back to their pre-tax-time state following the promotion.
“Many consumers who took up the offer on one or more of the 600 or so products in many cases paid the same as, or more than, what they would have paid immediately before and after the promotion,” ACCC chairman Rod Simms 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.”
When the ACCC targeted the promotion Kogan denied the claims and said the watchdog’s argument ignored critical facts and matters that were highly relevant to the situation, and that the marketing had been created “specifically to avoid the type of confusion alleged by the ACCC.”
However, internal messaging between Kogan staff that was used in the judgement showed that the business knew the promotion could be seen as misleading, with Kogan’s director of marketing asking other staff members not to refer to the deal as a ‘discount’ according to SMH.
And while a hearing on relief measures will be held at a later date, the ACCC is seeking declarations, injunctions, pecuniary penalties, corrective notices and costs to be paid. Sims told SMH they couldn’t put a number on penalties, but that “it’s a series matter and we need to send a serious signal.”
“The essence of consumer law is: don’t mislead consumers. If you say goods are going to be delivered in a certain time and then systematically you don’t [deliver], you’ve breached the law there,” Sims told SMH.
In a statement, Kogan said it had never intended to mislead any shoppers and that the ‘sale’ was “implemented in order to allow customers access to lower prices than the prices that applied without the coupon or promotion.”
“At all times, the company has been focussed on making the most in-demand products and services more affordable and accessible for all Australians,” the business said.
Kogan didn’t address the intentional increase in pricing, said the profit from the sale was immaterial and that this ruling wouldn’t have any adverse impact on future promotional activities, and that the business is reviewing the decision and “may provide a further update”.