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Kogan breached consumer law with 'false and misleading' sale

Kogan breached consumer law with 'false and misleading' sale

Prices were jacked up pre-sale and reduced post-sale

Ruslan Kogan (Kogan)

Ruslan Kogan (Kogan)

Credit: Kogan

The Federal Court has found Kogan breached the Australian Consumer Law by making false and misleading representations about an end of financial year sale in 2018.

In a proceeding brought by the Australian Competition and Consumer Commission (ACCC), it was found that an online Kogan sale from 27 to 30 June 2018 saw some product prices quickly raised by the retailer beforehand, and then dropped afterwards.

The sale, which offered a 10 per cent discount with the use of the code TAXTIME, was sent out to over 10 million consumers via email and 930,000 via SMS messages.

Email advertisements used phrases such as “48 hours left!” and “Ends midnight tonight!” in the attempt to attract consumers.

However, the Court found that the advertisements conveyed false or misleading representations as the online retailer increased the prices of over 600 products immediately before the promotion — in most cases by at least 10 per cent.

After the sale, those products saw their prices go down, with many going back to their pre-promotion prices.

Rod Sims, ACCC chair, said the commission brought the proceeding, which it started in May 2019, because there was a concern the sale did not present genuine savings.

“Many consumers who took up the offer on one or more of the 600 or so products in many cases actually paid the same as, or more than, what they would have paid immediately before and after the promotion,” Sims 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.”

Kogan responded to the ruling in a response listed to the Australian Securities Exchange (ASX), claiming the promotion was "not intended to mislead any shoppers" and the profit derived by the retailer from the promotion was "immaterial".

"[The promotion] was implemented in order to allow customers access to lower prices than the prices that applied without the coupon or promotion," Kogan stated.

"The ruling will not have any adverse impact on the company’s promotional activities, as the company updated its promotional activities in 2018."

The statement also added the retailer is reviewing the ruling.

No decision has been made yet on relief, including penalties, with plans to do so at a later date. The ACCC added it is seeking declarations, injunctions, pecuniary penalties, corrective notices and costs.

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Tags koganAustralian Competition and Consumer Commission

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