Kogan misled Australian consumers with a 10 per cent discount promotion, the Federal Court has ruled, with the online retail giant found to have increased the price of some items right before offering them on sale.
The Australian Competition and Consumer Commission (ACCC) launched legal proceedings against Kogan in May 2019 over a number of online ads telling consumers to use the code “TAXTIME” to reduce prices by 10 per cent at checkout.
The ads, which ran from 27 to 30 June 2018, were advertised to more than 10 million consumers in emails and reached nearly one million consumers by text message, and were also promoted on the Kogan website.
But the competition watchdog alleged that Kogan had raised the prices of more than 600 products just before the promotion was launched, and reduced them back down just after it finished.
Last week Federal Court Justice Jennifer Davies ruled that Kogan had breached Australian Consumer Law by making false and misleading representations about the promotion.
The court found that the prices of hundreds of products listed on Kogan had increased by at least 10 per cent just before the end of the financial year prompt was launched, and were reduced in the days after it finished.
In one case, a 15-inch Apple MacBook Pro was increased from $3,649 to $4,149 just before the 10 per cent discount promo was launched, and lowered back down to $3,649 after it concluded.
That meant that anyone who used the discount code would have paid $85 more for the laptop than if they purchased it before or after the promotion.
ACCC chair Rod Sims said consumers had been duped by the promo into believing they were saving money on the products.
“We brought this case because we were concerned that the advertised price reductions were not genuine savings,” Sims said.
“Many consumers who took up the offer of 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.
“All businesses must ensure that their advertisements do not mislead consumers about the nature of a promotion, and that any promised savings are genuine.”
A further hearing will be held at a later date to determine the potential penalties for Kogan, with the ACCC seeking declarations, injunctions, pecuniary penalties, corrective notices and costs.
The competition watchdog is reportedly seeking a fine as high as $10 million, the Sydney Morning Herald reported.
Kogan had previously argued that the 10 per cent offer was merely a “coupon code” rather than implying it was giving consumers a discount on the product’s prior price, and that only 0.8 per cent of its products were impacted by price increases during the promo.
But Justice Davies rejected these arguments, and said that the “dominant message” of the ads was that there was a discount on previous prices.
In an update to the market, Kogan said it was “currently reviewing” the ruling.
“The profit derived by [Kogan] from the promotion was immaterial and the ruling will not have any adverse impact on [Kogan’s] promotional activities, as [Kogan] updated its promotional activities in 2018,” the company said in the update.
“The promotion was not intended to mislead any shoppers and was implemented in order to allow customers access to lower prices than the prices that applied without the coupon or promotion.
“At all times, [Kogan] has been focused on making the most in-demand products and services more affordable and accessible for all Australians.”
It’s not the first time Kogan has been found to be misleading in its advertisements.
In early 2016 the company was fined $32,400 for a Fathers’ Day promotion regarding the prices of three computer monitors.
While the promotion offered a 20 per cent discount, a price increase meant that they were actually on offer for 9 per cent cheaper than the normal price.
Early last year it was revealed that Kogan had been the subject of the most customer complaints to the New South Wales consumer rights regulator than any other company. There were 70 complaints made about Kogan in January 2019, mostly regarding the quality of goods purchased on the site, delivery times, refunds and warranties.
