In court proceedings brought by the Australian Competition and Consumer Commisson (ACCC) Kogan - which has over 1.4 million active customers and sells a wide variety of goods including consumer electronics, furniture and toys - was found to have run the online promotion from 27 to 30 June 2018, advertising to consumers that they could use the code ‘TAXTIME’ to reduce prices by 10% at checkout.
The promotion was advertised on Kogan’s website, in emails it sent to more than 10 million consumers, and in SMS messages to more than 930,000 consumers.
In a statement issued by the ACCC on Thursday, the Commission says that towards the end of the promotion, Kogan’s email advertisements also included statements like ‘48 hours left!’ and ‘Ends midnight tonight!’ to entice consumers to make a purchase during the sale.
The Court found that the advertisements conveyed false or misleading representations because the Australian-listed Kogan (ASX: KGN) had increased the prices of more than 600 of its products immediately before the promotion.
In most cases the prices of these products had been increased by at least 10% and Kogan had also reduced the prices of these products shortly after the promotion ended, many back to their pre-promotion prices.
“We brought this case because we were concerned that the advertised price reductions were not genuine savings,” ACCC Chair Rod Sims said.
“Many consumers who took up the offer on one or more of the 600 or so products in many cases actually paid the same as, or more than, what they would have paid immediately before and after the promotion.”
“All businesses must ensure that their advertisements do not mislead consumers about the nature of a promotion, and that any promised savings are genuine,” Sims said.
A hearing on relief, including penalties, will be held at a later date, with the ACCC seeking declarations, injunctions, pecuniary penalties, corrective notices and costs.