Kogan fined $350K over misleading ‘tax time’ promotion

Australian online retailer Kogan has been hit with a hefty $350,000 fine over a misleading promotion it ran in late June 2018, which saw the company offering discounts on products that had price increases just before the promotion.

The Federal Court issued the penalty in response to a case filed by the Australian Competition & Consumer Commission (ACCC) in May last year.

In July this year, the Federal Court found that Kogan, which sells a variety of goods including electronics, furniture and kitchen appliances, had mislead consumers by advertising over a period of four days that they could use the code ‘TAXTIME’ to reduce the prices of products by 10 per cent at checkout.

However, the court found, the online retailer had actually raised the prices of 621 products – in most cases by at least 10 per cent – before launching the promotion, and then decreased those prices soon after the promotion ended.

ACCC chairman Rod Sims said many consumers who used the code ended up paying more.

“In many cases, consumers who used the promotional code to purchase these products paid the same as, or more than, they would have paid before or after the promotion,” he said in a statement on Monday.

“Consumers were not receiving a genuine 10 per cent discount as promised, and this affected high-value products such as Apple MacBooks, cameras and Samsung Galaxy mobile handsets.”

Sims went on to say that the court’s decision should send “a strong signal to businesses like Kogan” that they should not trick consumers into believing they’re grabbing a discount when, in actual fact, they’re not.

Meanwhile, Justice Jennifer Davies who presided over the case 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.”

However, in a statement to the ASX, Kogan said the misleading promotion was not a deliberate act to contravene conduct and it was reviewing the court ruling.

“The company is currently reviewing the ruling of the Federal Court and may provide a further update once its review is complete,” the online retailer said in a statement. “At all times, the company has been focused on making the most in-demand products and services more affordable and accessible.”