Online retailer Kogan Australia has been sued by the consumer watchdog for offering fake discounts to its customers.
- ACCC has sued Kogan for advertising fake discounts
- The retailer allegedly raised prices before offering its ‘discount’
- Kogan denies the regulator’s allegations
Kogan is accused of raising prices on more than 600 products, before running a misleading online promotion claiming to offer a “10 per cent discount”.
The Australian Competition and Consumer Commission (ACCC) will argue in the Federal Court that Kogan increased prices by at least 10 per cent immediately before the promotion — which occurred between June 27-30, last year.
As part of its case, the ACCC will claim that Kogan created a false sense of urgency for the “discounts” through advertisements emailed to its customers.
The advertisements had statements including “48 hours left!” and “Ends midnight tonight!”
Shortly after the sale ended, Kogan allegedly reduced prices back to their “pre-promotion” levels.
“We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual prices,” said ACCC commissioner Sarah Court.
“In fact, Kogan had inflated product prices, which we say created a false impression of the effective discount.
“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings.”
At 12:50pm (AEST), Kogan’s share price had dropped 3.4 per cent to $6.04.
ACCC ignored ‘critical facts’, says Kogan
In a statement, Kogan said it “did not gain any material financial benefit as a result of the promotion”.
The retailer strongly denied the ACCC’s accusations, saying it would defend the case because the regulator ignored “critical facts”.
Kogan also said its marketing was “carefully considered” and “drafted specifically to avoid the type of confusion alleged by the ACCC.
“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.”
This is not the first time the Kogan has been in trouble with the consumer regulator.
In early-2016, Kogan paid a $32,400 for a misleading Father’s Day promotion, which claimed to offer a “20 per cent discount” for computer monitors.
Similarly, the retailer had increased prices on these monitors before offering the faux-discount, resulting in just a 9 per cent saving for customers.
Kogan was also forced to amend misleading claims, in April 2009, which it made in online and newspaper advertisements.
At the time, the ACCC said Kogan’s promotions “used price comparisons such as Now $X (Save Y%) and save over $X.”
However, the regulator said: “The products had not been offered by Kogan Technologies at the higher price.
“The savings were based on an estimated average price a consumer might pay for a product with similar specifications from another manufacturer.”