A marketing campaign by Kogan.com that the Federal Court declaring “false and misleading” has cost the online retailer $350,000 as well as legal costs.
Competition regulator the ACCC launched legal action against Kogan.com last year over the 2018 “tax time savings” alleging that the company increased prices on 621 products, in most cases by at least 10%, just before it offered a 10% discount in June of that year, and then dropped prices by 10% or more again in July after the sale ended.
The Court accepted the ACCC’s case and found that the advertisements conveyed false or misleading representations, in breach of Australian Consumer Law.
Justice Davies said: “Kogan’s contravening conduct must be viewed as serious, as misrepresentations about discounts offered on products not only harm purchasers acquiring such products on the basis that they are getting a genuine discount but also may impact on consumer confidence in discount promotions when legitimately made – that is, when products are being offered for sale with a genuine discount on price.”
Kogan.com was fined $350,000 for the Consumer Law breach and has also been ordered to pay the ACCC’s costs in the proceedings.
ACCC Chair Rod Sims said: “This decision sends a strong signal to businesses like Kogan, which regularly conduct online sales promotions, that they must not entice consumers to purchase products with a promise of discounts that are not genuine.”
In a statement to the ASX today Kogan.com (ASX: KGN) pointed out that today’s judgment on a penalty said: “…Kogan did not deliberately
intend to engage in the contravening conduct and the material does not indicate a culture of non-compliance or disregard of the law”.
The company made a provision of $700,000 for the potential penalty and costs in its FY20 accounts.
Kogan.com said it is currently reviewing the ruling of the Federal Court and may provide a further update once its review is complete.