Australian online retailer Kogan must think all of its Christmases have come at once, after the Federal Court ordered it to pay just $350,000 for deliberately misleading consumers.
In July, the court found Kogan breached Australian Consumer Law, after it mislead consumers by raising the price of 621 items immediately before offering a ’10 per cent off’ Tax Time sale.
But the miniscule fine is unlikely to bother CEO Ruslan Kogan.
Kogan currently has a market cap of $1.91 billion. In the last financial year, it made a net profit of $26.8 million, up 56 per cent, as consumers shopped heavily online at the height of the pandemic in Australia.
The Australian Competition and Consumer Commission (ACCC), which instigated the proceedings against Kogan, believes the $350,000 fine will act as a deterrent.
“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,” said ACCC chair, Rod Sims.
In handing down the fine, Justice Davies said, “Kogan’s contravening conduct must be viewed as serious, as misrepresentations about discounts offered on products not only harm purchasers acquiring such products on the basis that they are getting a genuine discount but also may impact on consumer confidence in discount promotions when legitimately made – that is, when products are being offered for sale with a genuine discount on price.”
Kogan was ordered to pay the ACCC’s costs.
Last week, Kogan snapped up New Zealand online retailer Mighty Ape for $122.4 million, adding to its portfolio which includes the Matt Blatt and Dick Smith brands.
