- Retailer Kogan.com (KGN) will be fined millions of dollars after it was found guilty of misleading customers during a 2018 sale
- The Australian Federal Court upheld the allegations from the Australian Competition and Consumer Commission on Friday
- In May last year, Kogan briefly raised the price of items during a four-day sale for the end of the financial year
- Those same items were then advertised as ‘discounted’ and even returned to their original pricing after the sale
- A definitive fine will be chosen at a later date, but precedent indicates consumer law breaches can attract up to $10 million in fines
- Despite the announcement, Kogan.com shares swung 0.76 per cent into the green in early Monday trade, priced at $17.13 per share
Retailer Kogan.com (KGN) will be forced to pay millions of dollars in fines after misleading customers during a 2018 sale.
Allegations against the company were made by the Australian Competition and Consumer Commission (ACCC).
The ACCC sued Kogan in May of 2019, alleging the retailer raised prices of products before lowering them for the 2018 end of financial year sale.
The ACCC’s allegations were upheld in Australian Federal Court this Friday.
The misconduct occurred on Kogan’s website between June 27 and June 30. Customers looking for a discount entered the code ‘TAXTIME’ for a 10 per cent saving during checkout.
However, the opportunity, advertised to nearly 11 million shoppers over email and text, was found to be ‘misleading’ and ‘false’ by the Federal Court.
“We brought this case because we were concerned that the advertised price reductions were not genuine savings,” ACCC Chairman Rod Sims said.
“Many consumers who took up the offer on 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,” he continued.
Prices for the special items were even reduced back to their pre-sale values after the end of financial year sale — essentially duping many Australians into a fake deal.
No specific fine has been laid out for Kogan yet, but precedent indicates consumer law breaches can attract up to $10 million in fines. An agreement on damages will be determined at a later date.
As of now, the ACCC is seeking to slap Kogan with fines for penalties, injunctions, corrective notices, and costs.
“All businesses must ensure that their advertisements do not mislead consumers about the nature of a promotion, and that any promised savings are genuine,” Rod added.
After the court ruling, Kogan issued a media release to the Australian Securities Exchange.
“The profit derived by [Kogan] from the promotion was immaterial and the ruling will not have any adverse impact on the company’s promotional activities, as the company updated its promotional activities in 2018,” it read.
“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,” Kogan continued.
“[Kogan] is currently reviewing the ruling of the Federal Court and may provide a further update once its review is complete,” the company concluded.
The retailer is seeking to provide a business update before the end of this month.
Despite the announcement, Kogan.com shares swung 0.76 per cent into the green in early Monday trade, priced at $17.13 per share at. 12:01 pm AEST.