The Federal Court has ordered Kogan Australia Pty Ltd (Kogan) to pay a penalty of $350,000 for making false or misleading representations about a tax time sales promotion, in breach of Australian Consumer Law.
In July 2020, the Court found that Kogan had misled consumers by advertising over a period of four days that they could use the code ‘TAXTIME’ to reduce prices by 10 per cent at checkout, when Kogan had increased the prices of 621 products immediately before the promotion.
In most cases, the prices of these products had been increased by at least 10 per cent. Kogan then decreased those prices soon after the promotion ended, many back to their pre-promotion prices.
Kogan made these statements to consumers in June 2018 on its website, via emails sent to over 10 million consumers, and by SMS messages to over 930,000 consumers.
“In many cases, consumers who used the promotional code to purchase these products paid the same as, or more than, they would have paid before or after the promotion,” ACCC Chair Rod Sims said.
“Consumers were not receiving a genuine 10 per cent discount as promised, and this affected high-value products such as Apple MacBooks, cameras and Samsung Galaxy mobile handsets.”
Towards the end of the promotion, Kogan also used statements such as ’48 hours left!’ and ‘Ends midnight tonight!’ in some emails to consumers, to create a sense of urgency to entice consumers to make a purchase during the tax time promotion period.
In her judgment, 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.”
“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,” Mr Sims said.
The Court also made declarations and ordered Kogan to pay the ACCC’s costs of the proceedings.
Kogan Australia Pty Ltd (a subsidiary of Kogan.com (ASX:KGN)) is an online retailer with over 1.4 million active customers which sells a wide variety of goods including consumer electronics, furniture and toys.
In May 2019, the ACCC launched legal proceedings, alleging Kogan made false or misleading representations about a 10 per cent price reduction promotion.
An example of Kogan’s website promotion is below: