ACCC Begins Federal Court Proceedings Against Kogan For False Or Misleading Sale Advertising

Thursday 30 May 2019 @ 9.25 a.m. | Legal Research | Trade & Commerce

The Australian Competition and Consumer Commission (the “ACCC”) has announced in a Media Release that they have instituted proceedings against Kogan Australia Pty Ltd (“Kogan”) in the Federal Court of Australia, alleging that Kogan made false or misleading representations about a 10 percent discount promotion, thus breaching the Australian Consumer Law (the “ACL”, contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth)).

Background

The ACCC alleges that between 27 June 2018 and 30 June 2018, Kogan ran an online promotion where consumers could obtain a 10 percent discount on most of its products by using the discount code “TAXTIME”. The promotion was held ahead of the end of the 2017-2018 financial year and was published on its website, via text messages and emails to consumers.

According to a report published in the Sydney Morning Herald (“SMH”), the ACCC will allege that from 26 June 2018 to 2 July 2018, Kogan then raised the advertised prices on approximately 600 products. The prices were increased to such an extent that, even with the discount code, customers were paying more than they would have before the promotion.

Towards the end of the promotion period, Kogan’s email advertisements used statements such as "48 hours left!" and "Ends midnight tonight!" which the ACCC will allege gave the impression that consumers only had a limited time to purchase at the “discounted” prices.

Comment from the ACCC

ACCC Commissioner Sarah Court commented in the Media Release:

“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. Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings.”

Previous ACCC action against Kogan

In January 2016 the ACCC took action against Kogan for allegedly engaging in pricing conduct which raised similar concerns. In that instance, the ACCC issued three infringement notices totalling $32,400, as it had reasonable grounds to believe that Kogan had made false or misleading representations about the price of three computer monitors which were advertised by Kogan during a Fathers’ Day Promotion on its eBay store, thus contravening the ACL.

The ACCC said in a media release published at the time:

“… before or at the start of the promotion, Kogan increased the prices of the three computer monitors featured on its eBay store. As a result, although consumers received a 20 percent discount off the newly increased prices, they in fact only received a 9 percent discount off the previously advertised prices for each of the three computer monitors. Shortly after the promotion ended and the 20 percent discount offer ceased, the advertised prices of the three computer monitors returned to the lower prices offered on Kogan’s eBay store before the promotion commenced.”

See our previous TimeBase article for more on the history of the matter.

Response from Kogan

In a Media Release, a spokesperson for Kogan.com said:

“… Kogan.com wishes to make clear that it strongly denies the allegations and will defend the proceedings … 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.”

The ACCC has also lodged a Concise Statement with the Federal Court, which lists all products and the prices before, during and after the promotions. The ACCC is also seeking penalties, injunctions, declarations, corrective notices and costs from Kogan.

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