Federal Court rules Kogan online promotions were false and misleading

The online retailer had been accused of hiking prices prior to sales by the ACCC.
Written by Campbell Kwan, Contributor

An example of Kogan's web promotion.

Image: ACCC

Kogan has yet again been found of inflating prices prior to its online retail sales, with the Australian Federal Court ruling on Friday morning that the company made false and misleading representations to consumers. 

The legal action, raised by the Australian Competition and Consumer Commission (ACCC) last year, alleged that Kogan ran an online promotion where consumers could obtain a 10% discount on most of its products through the use of a discount code between 27 and 30 June 2018.

Justice Jennifer Davies found the promotion was in breach of Australian Consumer Law as Kogan upped its prices for more than 600 of its products ahead of the sale. In most cases, prices increased by at least 10%, with the ACCC putting forth in proceedings that Kogan had reduced the prices of the affected products back to their pre-promotion prices shortly after the promotion ended.

The watchdog had also alleged that the online retailer published the promotion via its website, text messages, and emails to customers. These promotions included statements such as "48 hours left!" and "ends midnight tonight!". The ACCC had previously said that these promotions were sent to approximately 25.7 million consumers. 

"We brought this case because we were concerned that the advertised price reductions were not genuine savings," ACCC chair Rod Sims said.

"All businesses must ensure that their advertisements do not mislead consumers about the nature of a promotion, and that any promised savings are genuine."

With the court ruling in favour of the ACCC, Davies has ordered for a penalties hearing at a later date to settle how much Kogan will be fined for false and misleading representations.

"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. At all times, the company has been focused on making the most in-demand products and services more affordable and accessible for all Australians," Kogan said in a statement [PDF].

Kogan was previously fined AU$32,400 for using false or misleading representations for a Father's Day promotion. At the time, the ACCC ruled the online retailer intentionally increased its prices before offering customers a discount.

"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 at the time.

Last month, the ACCC won a separate legal battle that resulted in Sony being ordered to pay AU$3.5 million in penalties for denying consumers the right to refund for faulty digital games. 

Updated at 11:15am AEST, 17 July 2020: Added comments from the ACCC and Kogan.

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