The Australian Competition and Consumer Commission (ACCC) is suing online retailer Kogan, alleging the company created fake discounts that are in breach of Australian Consumer Law.
Kogan has been accused of running a misleading online promotion from June 27 - June 30 2018. The ACCC stated that Kogan raised the prices of more than 600 products before proceeding to include them in a 10% discount promotion.
In most cases the initial price hike was more than 10%, thus netting additional profit for the company.
The 'deal' was promoted on Kogan's website, as well as pushed out to customers via email and text.
The ACCC is also claiming that Kogan created a sense of urgency towards the end of the campaign, emailing advertisements to customers that included phrases such as "48 hours left!" and "End midnight tonight!"
Consequently, these calls to action made customers believe that they only had a limited time to take advantage of the fake discounted prices.
"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 documents.
"Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings".
Shortly after the promotion ended, Kogan is said to have reduced the included prices back to their original, cheaper 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 that the ACCC has taken Kogan to task. In 2006, the company was fined $32,400 for increasing the price of three monitors before including them in a Father's Day sale.
And in 2009, concerns were raised over misleading savings claims and price comparisons made by the company.
The ACCC will be "seeking penalties, injunctions, declarations, corrective notices and costs" from Kogan.
Kogan has denied the ACCC's allegations in a media release on the ASX. The company claims that the ACCC has ignore facts that it believes are relevant to the promotion and the impression it made on consumers.
You can read the statement in full here:
"The ACCC has commenced proceedings against Kogan Australia Pty Ltd (Kogan.com), alleging that Kogan.com engaged in misleading conduct in respect of a promotion conducted for four days in June last year.
At the outset, Kogan.com wishes to make clear that 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.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.
Kogan.com has always put its customers’ interests first and continues to do so. Kogan.com 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.