The Federal Court rules Kogan misled customers on a sales promotion by jacking up the price before applying discounts

  • The Federal Court found Australian online retailer Kogan to have breached consumer law by making misleading claims on a sales promotion in 2018.
  • At the time, customers were informed that they could use the code ‘taxtime’ to get a 10% discount on items at the checkout.
  • However, the court found Kogan drove up the price on more than 600 products right before the promotion.
  • Visit Business Insider Australia’s homepage for more stories.

Kogan has come under fire after the Federal Court found it breached consumer law by making false and misleading claims about its tax time promotion.

Between 27 and 30 June 2018, Kogan ran a promotion where customers were told they could use the code ‘taxtime’ to get a 10% discount at the checkout.

This was advertised on Kogan’s website, its emails to more than 10 million people and text messages sent to more than 930,000 people. Before the promotion ended, emails with more alluring subject lines such as ‘ends midnight tonight’ and ’48 hours left’ were sent out.

Example of Kogan’s website promotion. Image: ACCC

In 2019, the Australian Competition and Consumer Commission (ACCC) launched legal proceedings about the 10% discount.

“We brought this case because we were concerned that the advertised price reductions were not genuine savings,” ACCC Chair Rod Sims said in a statement.

The Federal Court found the promotion made false claims because Kogan raised the price of more than 600 of its products right before it. In most cases, the prices were increased by at least 10%.

Once the promotion ended, Kogan dropped the prices of the products again.

“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,” Sims added.

In a statement to the ASX, Kogan said the profit it gained from the promotion was “immaterial” and the ruling won’t have any “adverse impact on the company’s promotional activities” since Kogan updated them back in 2018.

“The promotion was not intended to mislead any shoppers, and was implemented in order to allow customers access to lower prices than the prices that applied without the coupon or promotion,” Kogan said.

“At all times, the company has been focussed on making the most in-demand products and services more affordable and accessible for all Australians.”

The court findings come after Kogan announced a capital raise of $115 million in June – its first since listing.

A hearing on any penalties is slated for a later date.

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