Online retailer Kogan slugged $350k penalty for fake ‘discount’ promotion - The Mercury

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Online retailer Kogan has been slugged $350,000 for offering consumers “discounts” on products that had price increases just before the promotion.

The Federal Court found the company had misled consumers by advertising over four days that they could use the code ‘TAXTIME’ to reduce prices by 10 per cent at checkout when Kogan had lifted the prices of 621 products immediately beforehand – in most cases by at least 10 per cent.

Kogan then dropped the prices soon after the June 2018 promotion ended, many back to their pre-promotion cost.

The company made the “offers” on its website, via emails sent to more than 10 million consumers and by SMS messages to more than 930,000 shoppers.

“In many cases, consumers who used the promotional code to purchase these products paid the same as, or more than, they would have paid before or after the promotion,” Australian Competition and Consumer Commission chair Rod Sims said on Monday.

“This affected high-value products such as Apple MacBooks, cameras and Samsung Galaxy mobile handsets.”

Towards the end of the promotion, Kogan also used statements such as “48 hours left!” and “Ends midnight tonight!” in some emails to create a sense of urgency to entice consumers to make a purchase.

Kogan has been penalised for dodgy promotions before.

In her judgment, Justice Jennifer Davies said the conduct must be viewed as serious as they were not only misrepresentations but could also affect consumer confidence in legitimate discount promotions.

Kogan has also been ordered to pay the ACCC’s legal costs.

“This decision sends a strong signal to businesses like Kogan, which regularly conduct online sales promotions, that they must not entice consumers to purchase products with a promise of discounts that are not genuine,” Mr Sims said.

The company said it had made a provision of $700,000 for the penalty so the actual sum obviously came as a pleasant surprise to investors, who sent the shares 5.8 per cent higher in intraday trade.

“The profit derived by the company from the promotion was immaterial, and the prior ruling will not have any impact on the company’s ongoing promotional activities, which were updated in 2018,” Kogan said in a statement to the ASX.

“Kogan.com has a compliance program in place, which comprises protocols for the internal and external review of promotional statements and associated collateral.”

The company said it was reviewing the court ruling and may provide a further update on the matter.

It’s not the first time Kogan has been pinged by the ACCC.

In 2016, the company paid $32,400 in penalties, again for making misleading “offers” in a Father’s Day promotion.

Originally published as Retailer slugged for fake discounts

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