Kogan fined AU$350,000 for offering 'discounts' on products with inflated prices
Kogan has been ordered by Australian Federal Court to pay AU$350,000 for misleading consumers by inflating the prices of products and then promoting "discounts" for these products.
The court already found the company misleadingly inflated prices for its online retail sales back in July. Kogan hiked the prices of over 600 products and then promoted "discounts" for these products. Shortly after the sale ended, Kogan proceeded to reduce the prices of the affected products back to their pre-promotion prices.
In most cases, prices increased by at least 10%, with the Australian Competition and Consumer Commission (ACCC) put forth in proceedings.
Since that judgment, the court has been working towards settling how much Kogan would be fined for its false and misleading representations, with Justice Davies finalising the AU$350,000 figure on Monday morning.
"All businesses must ensure that their advertisements do not mislead consumers about the nature of a promotion, and that any promised savings are genuine," ACCC chair Rod Sims said.
The issuing of the AU$350,000 penalty brings a close to the matter, which was commenced by the ACCC in May last year.
Four years ago, the online retailer was fined AU$32,400 for similarly using false or misleading representations in a Father's Day promotion. At the time, the ACCC ruled the online retailer intentionally increased its prices before offering customers a discount.
Shortly after the revelation that Kogan yet again misled consumers, the online retailer reported that it continued to increase its net profit after tax (NPAT) despite the pandemic. For the 2020 financial year, Kogan amassed AU$26.8 million in NPAT -- a jump of 56% from the previous financial year.
Gross sales and revenue for the 2020 financial year also increased to AU$769 million and AU$498 million, respectively, which were increases of 39.3% and 13.5% from the prior year.
Related Coverage
- Kogan continued to grow net profit during FY2020
- Federal Court rules Kogan online promotions were false and misleading
- ACCC hauls Kogan to court for alleged price hiking before discounting, again
- Kogan reports gross sales lifted 30% in Q3 amid coronavirus disruptions
- Kogan ends H1 with nearly 1.7m customers and AU$9m in profit
- Kogan's mobile and branded products increase net profit by 20% for FY19
- Understanding and serving shifting consumer needs during and post-COVID-19 (TechRepublic)