Kogan has been busted lying about its prices.
That’s according to the Australian Competition & Consumer Commission (ACCC) which has launched proceedings against Kogan over a “false or misleading” promotional strategy for its end-of-financial-year sale last year.
The fast-growing company – which has a market capitalisation of $557m and grew customer numbers by 23.4 per cent to 1.589m over the year to April – is alleged to have deceived customers by advertising false savings In a promotion it ran in June 2018.
Kogan, the ACCC alleges, boosted prices on more than 600 products by more than 10 per cent, then offered customers a tax-time promotional code that purported to save them 10 per cent off those prices.
The company repeatedly contacted customers to create a sense of urgency as the supposed deadline neared – but after the promotion ended, the prices were reduced to their normal levels.
“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings,” ACCC commissioner Sarah Court said in announcing the enforcement action.
“In fact, Kogan had inflated product prices which we say created a false impression of the effective discount.”
Making consumers happy…
Kogan, which has pursued heavy discounting and parallel importing to take on established competitors, has enjoyed a love-hate relationship with consumers and industry figures over the years.
In 2017, consumer-advocacy group Canstar Blue recognised Kogan as one of the country’s favourite brands, giving it the Most Satisfied Customers award and giving it five out of five stars in categories including reliability, value for money, ease of use, and overall satisfaction.
“Australians are savvy consumers and know if they’re getting a good deal or not,” Canstar Blue editor Simon Downes said at the time.
Kogan was also named Best Large Online Retailer in the 2017 and 2018 Australia Post Online Retail Industry Awards (ORIA) People’s Choice Awards.
…and regulators seethe
Yet the company’s policies have frequently come under scrutiny, with consumer-rights groups repeatedly taking it to task.
As early as 2013, WhistleOut was questioning whether Kogan Mobile was misleading customers over its prepaid offering.
In 2016, the ACCC issued three infringement notices and fined Kogan $32,400 for “false or misleading” claims related to a 2015 promotion in which, similar to the current action, Kogan boosted prices on three products and then offered consumers a 20 per cent discount on the products.
Last year, competing retailer Catch Group launched Federal Court of Australia action against Kogan, alleging that the firm had registered the domain catchmobile.com.au and applied for several trademarks that included the word ‘catch’.
In January, a CHOICE investigation warned that Kogan was making refunds “harder than they should be” and cited a “Kogan whistleblower” who said that such practices were “standard procedure”.
CHOICE Help, the group’s mediation service, has lodged 22 cases involving Kogan since 2016, the firm reports, citing Kogan’s “apparent avoidance” of its obligations under Australian Consumer Law.
In February, Kogan achieved the dubious distinction of becoming NSW’s most frequently complained-about company for the fourth time – besting Apple after NSW Fair Trading received 70 complaints about the company in January alone.
Kogan – which in March launched an Amazon-styled Kogan Marketplace offering more than 100,000 products – said in a statement that it “strongly denies the allegations” in the ACCC’s current proceedings, arguing that it had overlooked “critical facts and matters” used by “consumers who are intimately familiar with online retailing and how a discount code functions.”
“Kogan.com is unashamed about its obsession with constantly driving down prices,” the firm said, noting that it “did not gain any material financial benefit as a result of the promotion.”