Online retailer Kogan is facing fines of up to $10,000,000 for allegedly increasing the price of products before offering a 10 per cent discount.
The retail giant has been taken to court by the consumer watchdog over alleged false or misleading discount advertisements.
The ACCC launched proceedings against the retailer in the Federal Court on Thursday morning, alleging that they made false or misleading representations about a 10 per cent discount promotion.
The watchdog claims that a promotion run at the end of the 2017/18 financial year was misleading because prior to launching the 10 per cent discount promotion the retailer allegedly hiked the price of more than 600 of its products, “in most cases” increasing the price by at least the same amount.
The promotion, which was run between the 27th and 30th June last year, was advertised on its website and via text.
“We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual prices. In fact, Kogan had inflated product prices which we say created a false impression of the effective discount,” ACCC Commissioner Sarah Court said.
Towards the end of the promotion period, Kogan’s email advertisements used statements such as “48 hours left!” and “Ends midnight tonight!” which the watchdog claims gave the impression consumers only had a limited time to purchase the products at the “discounted” prices.
According to the ACCC’s website the maximum penalty for a breach of the consumer law is $10,000,000.
In a statement Kogan said that it “strongly denies” the allegations and will defend the proceedings.
“The proceedings commenced by the ACCC ignore critical facts and matters which are in Kogan.com’s view highly relevant in assessing the overall impression of the promotion by consumers who are intimately familiar with online retailing and how a discount code functions,” the statement reads.
The retailer also says that its marketing collateral was “carefully considered” and “specifically” drafted to avoid the confusion the ACCC allege.