New code to keep group buying sites in line

A new Code of Conduct has been released for the burgeoning group buying site industry as consumer complaints about the fledgling industry grow.

The Australian Direct Marketing Association (ADMA) and the Australian Interactive Media Industry Association (AIMIA) jointly released the Australian Group Buying Code of Conduct on Wednesday.

The code has four key objectives:

  • Ensure consumers have access to products and service information they need to make informed choices. 
  • Promote compliance within the industry with relevant laws including Competition and Consumer Act 2010, Privacy Act 1988 including the National Privacy Principles and the Spam Act 2003.
  • Promote fair, honest, ethical best practice within the group buying industry.
  • Increase consumer confidence in dealing with group buying platforms. 

While voluntary, eight key group buying sites have signed up prior to its public release: Cudo, Groupon, Jump On It, LivingSocial, Ouffer, Spreets, OurDeal and Scoopon.

ADMA and AIMIA say the code includes “an independent, transparent and open complaint-handling process when consumers have been unable to resolve an issue with a group buying company in the first instance”.

“The complaint process has been designed to encourage the group buying industry to resolve established consumer complaints,” the two bodies said in a statement.

The complaint handling process will be managed by the ADMA Code Authority.

The code outlines best practices for group buying platforms, including:

  • Making all communication methods clear so the subscriber fully understands the offer before accepting it. 
  • Making sure the appropriate policies and procedures are in place and are available to subscribers. 
  • Ensuring all marketing and electronic messages comply with relevant legislation. 

The two bodies say that in addition to the code, signatories are taking additional steps to reinforce with merchants their obligations under the law.

Now that the code has been launched, industry will be turning its attention to incorporating the Australian Group Buying Code of Conduct into the existing ADMA Code of Practice.

Jodie Sangster CEO, ADMA said while group buying was a relatively new phenomenon in Australia, a report published by Telsyte shows the market grew from $123.9 million in the second quarter of 2011 to $158.5 million in the third quarter and is well on track to exceed market forecast of $400 million for the 2011 calendar year.

“All group buying companies are welcome to sign up to the Code and take part in this important scheme.”

John Butterworth, CEO, AIMA, said Australian consumers are clearly enthusiastic about group buying deals.

“As a comparatively new industry it’s essential that we move as quickly as possible to implement measures that make group buying a rewarding and successful experience for consumers, merchants and group buying platforms alike. The code has been developed by the industry associations to help establish group buying as a mainstream channel.”

Billy Tucker, CEO of Cudo described the code as essential to not only protect the industry, but merchants and customers alike.

“We welcome this initiative and wholeheartedly support it.”

Colin Fabig CEO of LivingSocial, said his company was 100 per cent behind the code and its emphasis on providing an outstanding customer experience.

“We are thrilled to see the whole industry move toward this kind of improvement.”

Patrick Schmidt, CEO and co-founder of Groupon Australia and NZ, said Groupon was pleased to see the industry taking proactive steps to protect consumers and businesses.

“The launch of the code signals a new step for the group buying industry on the road to becoming a well established, much loved and well used channel that allows consumers and businesses to connect in a mutually beneficial way.”

“For Spreets, we believe that group buying offers real benefits for both consumers and merchants alike. Our focus is on ensuring the best possible group buying experience and welcome any move that helps to further instill consumer and merchant confidence in the work that we do, and the sector as a whole,” said Dean McEvoy, CEO, Spreets.

Simon Robinson, Ouffer’s CEO described the code as “a crucial step for the Group Buying Industry” as it instills trust and promotes transparency to consumers as well the businesses marketed.

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