Online retailer Kogan has been fined $350,000 for enticing customers to shop at their stores with a misleading 10 percent End of Financial Year promotion.
The Federal Court of Australia found Kogan had increased the prices of 621 products immediately before their four-day promotion was run in June 2018.
After the “TAXTIME” promotion concluded, Kogan reduced the prices back to normal.
“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,” Australian Competition and Consumer Commission (ACCC) Chair Rod Sims said.
“Consumers were not receiving a genuine 10 percent 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 ran advertisements claiming: “48 hours left!” and “Ends midnight tonight!” to generate urgency and attract more customers.
The retailer promoted these advertisements to over 10 million consumers.
Justice Jennifer Davies, in her judgement, said Kogan’s conduct was serious and harmful:
“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 …”
Sims said, “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.”
The Court also ordered Kogan pay the ACCC’s costs for bringing the proceedings, which were initially launched in May 2019.
Rob Nicholls, associate professor at the University of New South Wales said the incident highlighted Kogan’s lack of experience in the retail space.
“In the traditional retail sector (bricks and mortar), there is an ingrained understanding that any discount needs a price defined in time (when it was at a higher price) and place (where was it offered),” he told The Epoch Times. “Kogan did not have this experience.”
“The only surprising result in this judgment is that the penalty was only $350,000. The same conduct by a High Street electronics store would have resulted in a much higher penalty,” he added alluding to how major retailers Harvey Norman and JB Hi-Fi would face much tougher scrutiny due to their size and market share.
Kogan is a Melbourne-based retailer with over 1.4 million active customers. They sell a wide variety of goods, including consumer electronics, furniture, and toys.