Federal Court fines Scoopon AU$1m for misleading conduct

Group-buying website Scoopon has been fined AU$1 million by the Australian Federal Court for misleading both consumers and businesses.

The Australian Federal Court has ruled in favour of the Australian Competition and Consumer Commission (ACCC) and ordered group-buying website Scoopon to pay AU$1 million in penalties as a consequence of making false or misleading representations.

The decision, handed down on Tuesday, will see Scoopon pay the pecuniary penalty for contravening Australian Consumer Law (ACL) for misleading or making false representations about some of the goods and services advertised in deals on its website and about the ability for consumers to refund deals purchased; and by telling businesses there was no risk or cost in offering a deal on Scoopon, even though the company actually charges a fee, and for informing one business that 30 percent of the vouchers it sold would not end up being redeemed by customers, despite there being no reasonable foundation for this statement.

"The ACCC understands that Scoopon has worked to improve its systems and processes which gave rise to this conduct to meet its obligations under the ACL. However, this penalty serves as a warning to other businesses in the industry to improve their practices or face action from the ACCC," ACCC chairman Rod Sims said this afternoon.

An injunction was granted by the Federal Court to prevent Scoopon and its staff members for the next two years from partaking in similar misleading or false representations.

The court also ordered that Scoopon pay the ACCC's court costs; improve its compliance with Australian Consumer Law; and, as a community service order, arrange and run an educational workshop relating to issues with ACL that other group-buying websites who are members of the Association for Data-driven Marketing and Advertising (ADMA) might come across when operating their businesses online.

"Online traders must understand their obligations are the same as traditional retailers', and must not mislead customers or other businesses. The ACCC will continue to take further action in this area to improve business practices and protect small businesses and consumers," Sims added today.

The ACCC first took Scoopon to the Australian Federal Court in July this year, after receiving a flood of complaints from both consumers and businesses about its conduct.

"The ACCC has made online competition and consumer issues a compliance and enforcement priority," Sims said at the time. "Businesses must have reasonable grounds when making representations to consumers and to other businesses."

"Since we began, Scoopon has improved its processes for selecting and managing deals to improve our customer experience and is a founding signatory to the ADMA Code of Practice, which is aimed at increasing consumer confidence in dealing with group-buying platforms," Scoopon said in a statement in July.