Australian e-commerce giant Kogan (ASX: KGN) has been ordered to pay a $350,000 fine for making false or misleading representations about a tax time sales promotion.
The fine comes after the Federal Court found Kogan mislead customers by advertising over a period of four days that they could use the code 'TAXTIME' to receive a 10 per cent discount on purchases at the checkout.
However, the court found Kogan had actually increased the prices of 621 products immediately before the promotion started, in most cases by at least 10 per cent.
Kogan then decreased those prices soon after the promotion ended, many back to their pre-promotion prices.
"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," Australian Competition and Consumer Commission (ACCC) chair Rod Sims said.
"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."
Kogan made these statements to more than 10 million customers via email and more than 930,000 customers via SMS in June 2018.
In addition, toward the end of the promotion, Kogan used statements such as "48 hours left!" and "Ends midnight tonight!" in some emails to consumers.
An example of Kogan's 2018 TAXTIME promotion (via ACCC)
Justice Davies of the Federal Court described Kogan's infringements as "serious".
"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," she said.
The Court also made declarations and ordered Kogan to pay the ACCC's legal costs.
In a statement to the ASX Kogan said it is reviewing the ruling of the Federal Court.
"At all times, the company has been focussed on making the most in-demand products and services more affordable and accessible," Kogan said.
"Kogan.com has a compliance program in place, which comprises protocols for the internal and external review of promotional statements and associated collateral."
Shares in KGN are up 5.15 per cent to $18.28 per share at 11.14am AEDT.
Business News Australia