Kogan.com (ASX: KGN) may soon suffer a multi-million dollar fine for misleading consumers due to lifting prices and then discounting them.
What is Kogan.com?
Kogan.com Ltd is an online business that was set up by Ruslan Kogan in 2006 in his parent’s garage. Kogan.Com offers a variety of products and services including Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance and Kogan Travel. The company plans to launch Kogan Super in the near future. Kogan.Com aims to offer consumers price leadership through digital efficiencies.
Kogan.com’s fine
According to reporting by the Australian Financial Review, the Federal Court found that Kogan.com did mislead customers with tax time discounts by increasing prices to then supposedly discount them again, which is against consumer law. The price increase and discount that Kogan.com applied was at least 10%.
The advertising, which the court said was false or misleading, was sent in an email to over 10 million consumers and in text messages to almost 1 million people.
ACCC boss Rod Sims was quoted by the AFR: “We brought this case because we were concerned that the advertised price reductions were not genuine savings.”
“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.”
In a statement, Kogan.com said: “The profit derived by the company from the promotion was immaterial and the ruling will not have any adverse impact on the company’s promotional activities, as the company updated its promotional activities in 2018. The promotion was not intended to mislead any shoppers.
Summary
Kogan.com could face a fine of millions of dollars from this ruling by the Federal Court. STA Travel was recently given a $14 million fine. Hopefully this is the last advertising fine that Kogan.com receives.
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