ACCC targets Kogan for misleading customers

Ruslan Kogan, pictured right.

The Australian Competition and Consumer Commission will take online retailer Kogan to Federal Court, alleging that it “made false or misleading representations about a 10 per cent discount promotion”.

Kogan ran an online promotion from June 27-30, 2018, offering its 1.4 million customers a discount code to receive 10 per cent off most of the products available on the marketplace.

However, the ACCC alleges that Kogan raised the price of around 600 of its products before the promotion began, in most cases by at least 10 per cent.

“We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual prices,” ACCC Commissioner Sarah Court said in a statement.

“In fact, Kogan had inflated product prices which we say created a false impression of the effective discount.”

The online marketplace promoted the discount on its website, emails, and via text messages to customers, using statements such as “48 hours left!”, and “Ends midnight tonight!”, which the ACCC said gave the impression that the “discounted” prices were running out – though Kogan brought prices back in line with pre-promotion levels shortly after the promotion ended.

The ACCC gave examples of the offers in a filing to the Federal Court. They include a 15” Macbook Pro, which had its price changed from $3,649 on June 25, to $4,149 from June 26-July 1, and back to $3,649 on July 2.

With the discount, the item came down to roughly $3,650 during the promotion.

“Kogan’s conduct, in increasing prices before the promotion and decreasing prices after the promotion, eroded any real discount offered to consumers by the promotion,” the ACCC’s filing against Kogan reads.

“The harm that was or was likely to have been suffered by consumers includes the loss, or serious distortion, of genuine customer choice.

“Kogan’s conduct may also have unfairly disadvantaged its competitors.”

The ACCC warned Kogan over similar behaviour in 2009, and fined it $32,400 in 2016 for a misleading Father’s Day promotion.

Shares in Kogan dropped 4.8 per cent upon the allegations, from $6.25 a share on May 22, to $5.95 a share on May 23.

Kogan has denied the claims by the ACCC, saying they ignore critical facts and matters that are highly relevant in assessing the situation.

“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 said in a statement.

“Kogan.com cooperated fully with the ACCC throughout its investigation and explained in detail the above facts and matters [and] is disappointed that the ACCC has nevertheless decided to issue proceedings against Kogan.com.”

The online retailer noted that it didn’t gain any material benefit from the promotion, and that it doesn’t expect to change its promotions going forward as a result of the ACCC’s claim.

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