07/12/2020 - 14:00

Kogan hit with $350,000 fine

07/12/2020 - 14:00

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Australian retailer Kogan.com has been found guilty of misleading consumers by falsely claiming to offer a discount on some items, as part of a four-day promotion.

Kogan has been fined $350,000 over a promotion it ran in 2018. Photo: John Schnobrich

Australian retailer Kogan.com has been found guilty of misleading consumers by falsely claiming to offer a discount on some items, as part of a four-day promotion.

Kogan sells a variety of goods online, including consumer electronics, furniture and toys.

The retailer was found to have bumped up the prices of 621 items ahead of a promotion in June 2018 that offered a 10 per cent discount to consumers if they used the code ‘TAXTIME’ at checkout.

A promotional email was sent to more than 10 million subscribers, and SMS messages to more than 930,000 consumers.

The Australian Competition and Consumer Commission launched legal proceedings against Kogan in 2019, after it found the retailer had decreased the cost of items or returned them to the original pricing after the promotion.

Kogan had also used statements such as ’48 hours left!’ and ‘Ends midnight tonight!’ in promotional emails to encourage consumers to make a purchase, the ACCC said.

Chair Rod Sims said consumers ended up paying the same amount or more for items including laptops, cameras and mobile handsets than what they would have paid without the promotion.

Kogan has alleged any profit made during the promotion was "immaterial".

The Federal Court has found Kogan guilty of contravening the Australian Consumer Law, and subsequently ordered the retailer to pay a $350,000 penalty.

Kogan had already made a provision of $700,000 for the potential fine in its FY20 accounts.

“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,” Mr Sims said.

The decision was handed down by Justice Davies, who said Kogan’s conduct might also impact consumer confidence.

“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,” she said.

Justice Davies also said Kogan did not deliberately intend to engage in contravening conduct, and that the incident did not indicate "a culture of non-compliance or disregard of the law".

The court has made declarations and ordered Kogan to pay the ACCC’s costs of the proceedings.

Kogan said it was reviewing the ruling and would provide a further update upon completion.

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