ACCC issues Kogan AU$32k fine for price hiking before discounting

Electronics manufacturer and retailer Kogan has paid penalties that totalled AU$32,400 following the issue of three infringement notices by Australia's consumer watchdog.
Written by Asha Barbaschow, Contributor

Kogan has paid AU$32,400 in penalties after the Australian Competition and Consumer Commission (ACCC) ruled the online retailer intentionally increased its prices before offering customers a discount.

The watchdog said that as part of a Father's Day promotion it held last year, Kogan advertised via its eBay store that customers would receive a 20 percent discount on the Kogan 27" Cinema Display WQHD; Kogan 28" 4k LED monitor; and Asus 27" LED PB278Q monitor if purchased between August 24 and 29, 2015.

The ACCC said it had reasonable grounds to believe the online retailer increased the prices of these products before or during the promotion, essentially resulting in a 9 percent discount rather than the 20 percent discount that was advertised.

"It is simply unacceptable for businesses to raise prices before applying a discount in order to give consumers the misleading impression that they are obtaining a larger percentage discount than is actually the case," ACCC acting chair Michael Schaper said.

"Truth in advertising and consumer issues in the online market place are both current enforcement priorities."

According to the consumer watchdog, not long after the promotion ended and the 20 percent discount offer ceased, the advertised prices of the three computer monitors returned to the price they were originally offered for prior to the promotion.

The ACCC said that Kogan's payment is not an admission of a contravention of the Australia Consumer Law as the electronics retailer is simply paying a penalty specified in an infringement notice.

The watchdog also said it can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.

Last month, the ACCC took LG Electronics Australia to Federal Court with the watchdog alleging LG made false or misleading representations to consumers on their rights when it came to faulty LG goods.

When a consumer's LG warranty had expired, the ACCC claimed that LG asserted it had no further obligations, and any step it took in relation to the television was an act of goodwill. The tech giant is also accused of telling some consumers they were only entitled to have the television repaired and were not entitled to a refund or a replacement, and that the consumer was liable for the labour costs of any repairs.

"The ACCC will not hesitate to take appropriate action against manufacturers who misrepresent consumers' rights and remedies for defective products under the Australian Consumer Law," ACCC Chairman Rod Sims said at the time.

"The Australian Parliament has conferred these important rights."

In 2012, LG along with Panasonic, Sony, Samsung, and Sharp were also given a slap on the wrist by the ACCC for using the term "Wi-Fi Ready" too loosely.

Kogan made a move back into the mobile industry last year following a short-lived attempt in 2013 with the now defunct ISPOne. Kogan Mobile relaunched on the Vodafone network in October with plans to provide Kogan customers with a 4G service early this year.

Earlier this month, electronics retailer Dick Smith was placed into voluntary administration after failing to secure a funds injection from its banks.

According to Kogan, Dick Smith's administrator said that due to the financial circumstances of the Group, outstanding gift vouchers would not be honoured and deposits could not be refunded. As a result, Kogan stepped in to offer customers of Dick Smith a gift card or voucher swap up to the value of AU$25.

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