Court slaps Kogan with big fine for ‘tax-time sale’ that wasn’t

Online retailer Kogan Australia has been hit with a $350,000 fine by the Federal Court for making false and misleading claims relating to a tax-time sale in which prices for products were increased before the discount was advertised.

Dec 07, 2020, updated Dec 07, 2020
Kogan's 'taxtime sale', which led to a big fine.

Kogan's 'taxtime sale', which led to a big fine.

Kogan has made a provision for twice the level of the fine ($700,000) to deal with the costs of the case.

It said the profit it earned from the promotion was immaterial and it would not have an impact on ongoing promotions which have since been updated.

The court found Kogan had misled consumers by advertising over a period of four days that they could use the code “TAXTIME” to reduce prices by 10 per cent at checkout, when Kogan had increased the prices of 621 products immediately before the promotion.

The ACCC, which brought the prosecution, said Kogan made these statements to consumers in June 2018 on its website, via emails sent to over 10 million consumers, and by SMS messages to more than 930,000 consumers.

“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,” 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.”

Towards the end of the promotion, Kogan also used statements such as “48 hours left!” and “Ends midnight tonight!” in some emails to consumers, to create a sense of urgency to entice consumers to make a purchase during the tax time promotion period.

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In her judgment, Justice Davies 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.”

“This decision sends a strong signal to businesses like Kogan, which regularly conduct online sales promotions, that they must not entice consumers to purchase products with a  promise of discounts that are not genuine,”  Sims said.

However, Kogan also pointed out that the judgement also said that the company “did not deliberately intend to engage in the contravening conduct and the material does not indicate a culture of non-compliance or disregard of the law”.

The court also made declarations and ordered Kogan to pay the ACCC’s costs of the proceedings.

Analysts said the fine was at the lower end of what had occurred in recent times.

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