Kogan in Court for Price Jacking (Update: December 2020 - Kogan Fined by ACCC)

thydzik on 23/05/2019 - 10:14
Last edited 07/12/2020 - 17:52 by 1 other user

Kogan in Court for alleged false or misleading discount advertisements
23 May 2019
The ACCC has instituted proceedings against Kogan Australia Pty Ltd (Kogan) in the Federal Court alleging that Kogan made false or misleading representations about a 10% discount promotion, in breach of the Australian Consumer Law.

Between 27 and 30 June 2018, Kogan ran an online promotion where consumers could obtain a 10% discount on most of its products by using the discount code “TAXTIME”. The promotion was held ahead of the end of the 2017/18 financial year.

Kogan published this promotion on its website and via text messages and emails to consumers.

The ACCC alleges that Kogan’s advertisements were false or misleading because Kogan increased the prices of more than 600 of its products immediately before the promotion. In most cases prices increased by at least 10%.

“We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual prices. In fact, Kogan had inflated product prices which we say created a false impression of the effective discount,” ACCC Commissioner Sarah Court said.

Towards the end of the promotion period, Kogan’s email advertisements used statements such as “48 hours left!” and “Ends midnight tonight!” which the ACCC alleges gave the impression that consumers only had a limited time to purchase at the “discounted” prices.

However, Kogan reduced the prices of the affected products shortly after the promotion ended, many back to their pre-promotion prices.

“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings,” Ms Court said.

The ACCC is seeking penalties, injunctions, declarations, corrective notices and costs from Kogan.

https://www.accc.gov.au/media-release/kogan-in-court-for-all…

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Comments

  • dust on 23/05/2019 - 10:15
    +36

    Verdict for this might set an interesting precedent.

    • Diji1 on 23/05/2019 - 12:53
      -1

      What precedent?

    • Name on 23/05/2019 - 13:03
      +2

      One had already been set from the last time they were fined a few years back for doing the same thing.

      • dust on 23/05/2019 - 13:05

        Did you have a reference for this?

        • Name on 23/05/2019 - 13:05
          +4

          had the same thought and went looking before you even raised the question! hah

          https://www.accc.gov.au/media-release/kogan-pays-32400-penal…

          • dust on 23/05/2019 - 13:08
            +5

            @Name:

            As part of the Fathers’ Day promotion in 2015, Kogan advertised on its eBay store that consumers would receive a 20% discount on the following computer monitors if they were purchased between 24th and 29th August 2015:

            Kogan 27” Cinema Display WQHD;
            Kogan 28” 4k LED Monitor; and
            Asus 27” LED Monitor PB278Q.
            Before or at the start of the promotion, Kogan increased the prices of the three computer monitors featured on its eBay store. As a result, although consumers received a 20% discount off the newly increased prices, they in fact only received a 9% discount off the previously advertised prices for each of the three computer monitors.

            Thanks! Quote above is from your link.

            Looks like it's even worse this time, because with the price jack consumers were in some instances getting no discount off the regular price. (Whereas in the 2015 instance, they were at least getting 9% off.)

            • Name on 23/05/2019 - 13:24
              +2

              @dust: You're right! Also the previous one was for 3 products. This one is for over 600 products! Significant increase in crime.

              • sween64 on 24/05/2019 - 11:50
                +1

                @Name: And some products ended more expensive even with the 10% off code.

  • Quantumcat on 23/05/2019 - 10:18
    +20

    I wonder if they'll be able to hold ebay liable for their sellers price jacking after this

    • [Deactivated] on 23/05/2019 - 10:27
      +12

      Not directly but it may assist in new policies to ensure that eBay as a marketplace may have to penalize stores that price jack.

      Overall, this is a good thing.

    • mrvaluepack on 23/05/2019 - 12:26
      +1

      Would eBay be liable or the eBay stores like Harvey Norman, Good Guys?

    • Strahany on 23/05/2019 - 15:28
      +1

      I believe the loophole they use is that it’s eBay, the marketplace, offering the xx% discount; not the seller. As such, the seller is not liable for any discounts which eBay might offer.

      • lint on 23/05/2019 - 18:56
        +2

        Whatever the case, I think we should collect evidence and submit complaints to the ACCC to see what they have to say about the practice.

  • [Deactivated] on 23/05/2019 - 10:52
    +2

    another day another kogan story.

  • [Deactivated] on 23/05/2019 - 10:52
    +1

    Waiting for Gerry Harvey's two cents worth. It would be nice if the % off advertised was RMS.

  • navyskies on 23/05/2019 - 11:09
    +1

    Very good. Lets see what happens.

  • RedHab on 23/05/2019 - 11:13
    +10

    Good on the ACCC!

    Here's an ABC report on it, too:
    Kogan sued for lifting prices before offering 'false' discounts
    https://www.abc.net.au/news/2019-05-23/kogan-sued-by-accc-fo…

  • spackbace on 23/05/2019 - 11:26

    De-ja-vu to the old Dick Smith 'sales' - 1 week the prices were discounted, the next week they went up but with a coupon

    • Make it so on 23/05/2019 - 12:32
      +2

      I miss Dick Smith though…. my house is still full of electronics purchased from them below cost, from the period where they tried to trick people into believing they were making lots of money by dumping stock below cost.

  • Braggs on 23/05/2019 - 11:57
    +1

    about time

  • prisonmike on 23/05/2019 - 12:13
    +2

    What about for eBay sellers jacking up prices before the discount run? Lets hope they get a slice of the verdict as well.

    • xuqi on 23/05/2019 - 12:29
      +7

      They need to also go after EBay as they're complicit & enabling the behavior with their sales.

  • c64 on 23/05/2019 - 12:48
    +5

    same thing with "free shipping" promos. lower price + paid shipping or higher price + free shipping

  • dust on 23/05/2019 - 13:05
    +3

    If anyone wants some bedtime reading. Here's a link to the notice of filing.

    • thydzik on 23/05/2019 - 13:48
      +1

      Annexure 3 shows the original products and price changes

      621 products, I wonder where they got the info from.

      • Jiv on 23/05/2019 - 16:09
        +2

        idk… maybe some guy with too much time who likes to lurk on bargain sites.

        (did I just described the entire population of this site?)

        • petry on 23/05/2019 - 17:47
          +1

          that's less than the good guys most ebay sales without factoring in delivery changes….

      • CVonC on 23/05/2019 - 18:34

        I wonder where they got the info from.

        Price hipster?

  • Wystri Warrick on 23/05/2019 - 13:08

    ROFL 😂

  • bpop99 on 23/05/2019 - 13:35
    +1

    Thankful that at least one retailer is being sued for this

  • LukyTom on 23/05/2019 - 13:55
    +5

    I am so glad. This has had happened to me with Kogan and they wouldn't refund me the price difference. It was terrible, I had brought something during a promotion (with supposed sale), and then after a few weeks, the item dropped in price (but was not on sale and was normal). There is no trust in this company!

    It really makes me tremendously angry, to be honest. They should trade with ethics and integrity. And I hope that the ACCC fine them hard and another electronic company who is for the customer can take to the Aus markets.

    • lainey13 on 23/05/2019 - 23:00

      Well a few weeks is a bit of a stretch… immediately before and after yes but weeks? Prices change everywhere all the time…

    • c64 on 24/05/2019 - 13:14
      +2

      you was koganed!

  • Gerry H on 23/05/2019 - 14:04
    +7

    wat about all those ebay sellers just before the 20% discount?

    • milesandbos on 23/05/2019 - 16:30
      +5

      Hopefully they'll be next!

  • lysp on 23/05/2019 - 14:29
    +1

    Further story on it here:

    https://www.gizmodo.com.au/2019/05/accc-sues-kogan-over-alle…

    • xuqi on 23/05/2019 - 15:49

      Their statement to the ASX is a load of BS.

      • lysp on 23/05/2019 - 17:12

        "Kogan.com did not gain any material financial benefit as a result of the promotion."

        They are not denying they made money from promotion - just not a significant (material) amount. What amount is sufficient to be material is up for negotiation though.

        So they aren't lying in terms of that statement, just making it vague enough to be able to argue it later on.

  • Jack D Price on 23/05/2019 - 16:53

    I'm mildy shocked

  • smogg on 23/05/2019 - 18:17
    +2

    They still haven't learned their lession have they?

    • RedHab on 24/05/2019 - 09:48
      +1

      Probably cheaper just to pay the fine and keep jacking up prices.

  • Maglia Nera on 23/05/2019 - 19:26
    +2

    kogan sure have some stupid working for them …

  • Zazer on 23/05/2019 - 19:53
    +5

    WOW! The last one was 3 products in which customers only received a 9% discount as opposed to 20% as advertised, in that case Kogan had to pay a $32,400 fine.

    This is over 600 products, with the jacking making the products even more expensive, even after the discount. I can't wait to see the fine this time! This is gonna be good.

  • dust on 24/05/2019 - 10:05

    Another article on the SMH on this.

  • srhardy on 24/05/2019 - 10:36
    +3

    NAIL EBAY FOR THE EXACTLY THE SAME TRICK & ILL BE MORE IMPRESSED

  • Marble250 on 24/05/2019 - 16:17
    +1

    My latest with Kogan was a cheap second lawn mower, a "Powerblade". This I would say was a Chinese import from Baumr-AG, rebadged by Edisons and then offloaded to Kogan.
    When I deboxed it to assemble, I noticed it was chipped and rusted on the handlebar struts.

    I then discovered, when I tried to use their "new" complaints format, that seems like a catch- all that just dumps the complaint without submitting it….. they were flipping me the bird, as much as saying to me and all their to customers, finally - "you must realise, we are supplier of cheap crap, that sometimes works, so pay your money and take your chances!"

    Incidentally the mower works OK and I have discontinued my assault on Kogan, which of course they expect and rely on with their "no contact with unhappy clients" customer service.

    So, unless you're the type who expects a grizzly bear to lick your hand when you pat it, you should expect Kogan, and many others, to attempt to rip you off, in every transaction. You must, of course, account for this and take the appropriate steps to protect yourself.

    Remember they do perform a valuable cut-price service and operations like OZbargain would not have any reason to exist if it wasn't for Companies like Kogan

  • HeWhoKnows on 24/05/2019 - 17:21

    Oh dear.
    I never liked Kogan anyway.
    And they have price jacked their mobile plan prices as well.
    I have moved well away from them now.
    Better deals to be had elsewere

  • Banj0 on 30/05/2019 - 11:51
    +2

    Article on such price jacking and discounting tactics: https://www.abc.net.au/news/2019-05-30/kogans-fake-discounts…

  • shushu on 03/06/2019 - 14:04

    Can't wait until they nab Ola for price jacking too.

  • desync on 20/09/2019 - 01:35
    -2

    jesus.. i didn't even realise price jacking is illegal… seems a bit ridiculous tbh…

  • thydzik on 17/07/2020 - 11:10
    +1

    https://www.accc.gov.au/media-release/kogan-tax-time-promoti…

    The Federal Court has found online retailer Kogan Australia Pty Ltd (Kogan) breached the Australian Consumer Law by making false and misleading representations about a tax time sales promotion, in proceedings brought by the ACCC.

    Kogan ran the online promotion from 27 to 30 June 2018, advertising to consumers that they could use the code ‘TAXTIME’ to reduce prices by 10 per cent at checkout. The promotion was advertised on Kogan’s website, in emails it sent to more than 10 million consumers, and in SMS messages to more than 930,000 consumers.

  • thydzik on 07/12/2020 - 11:56
    +1

    Kogan to pay $350,000 for misleading tax time promotion

    https://www.accc.gov.au/media-release/kogan-to-pay-350000-fo…

    The Federal Court has ordered Kogan Australia Pty Ltd (Kogan) to pay a penalty of $350,000 for making false or misleading representations about a tax time sales promotion, in breach of Australian Consumer Law.

    • SnoozeAndLose on 07/12/2020 - 11:58

      $350,000 is just a friction of its operating cost for a month.

      • CamM on 07/12/2020 - 12:07

        You're right. They're also required to pay the ACCC's court costs, so hopefully the ACCC were employing the services of high-priced barristers!!

      • Bargain80 on 07/12/2020 - 12:47

        Agree. It's too small and won't teach them a lesson

        • SnoozeAndLose on 07/12/2020 - 12:49

          At least 3M or 1 month of sales whichever is greater.

    • Neilzy on 07/12/2020 - 12:53

      350k fine and their share price jumped ~5% because the market believes that the punitive fine was the full extent of it.

    • avoidfullprice on 07/12/2020 - 13:31

      Not a single consumer compensated?

  • ExPrinceHairy on 07/12/2020 - 13:31
    Merged from Kogan Fined by ACCC for Price-Jacking

    What do people think of this? Could this set a precedent for eBay's price-jacking tactic?

    • trustnoone on 07/12/2020 - 13:38
      +1

      What do people think of this? Could this set a precedent for eBay's price-jacking tactic?

      I'm going to guess not, considering the ACCC has gone for Kogan a few times already without much differences happening:

      Though this time is more substantial in fine then the first one.

      • trustnoone on 07/12/2020 - 13:43
        +1

        The company said it had made a provision of $700,000 for the penalty so the actual sum obviously came as a pleasant surprise to investors, who sent the shares 5.8 per cent higher in intraday trade.

        Wait does this mean they were already expecting to pay for a penalty and are happy they didn't have to pay as much?

        “The profit derived by the company from the promotion was immaterial, and the prior ruling will not have any impact on the company’s ongoing promotional activities, which were updated in 2018,” Kogan said in a statement to the ASX.
        “Kogan.com has a compliance program in place, which comprises protocols for the internal and external review of promotional statements and associated collateral.”

        Does this mean they're just going to keep doing what they're doing, and will just make sure that the collateral is enough to keep misleading? Or did I not read this right at all.

        • Hybroid on 07/12/2020 - 20:51

          Yep you read that right. It’s the equivalent of fining Google $1m. Barely registers as expenses and carry on business as usual.

          Won’t make an ounce of difference to people unfortunately. People will still buy from them and lap up the minor perceived savings as they don’t value quality, customer service and not supporting a dodgy company.

    • FIVEDOLLAR on 07/12/2020 - 13:39

      This is just the cost of doing business.

      • dust on 07/12/2020 - 16:21

        It's just an immaterial marketing expense at this rate.

    • chcse on 07/12/2020 - 13:42
      +3

      They really should change the fine to be twice the amount of profit from the price jacking plus another amount on top, and that the company being fined has to pay for a third party to calculate / audit the amount, because obviously Kogan is thinking that the fine is so minor and they make more profit out of doing this, that it is not a deterrent.

    • Ughhh on 07/12/2020 - 16:28

      eBay isn't the seller though, it's just a platform for sellers. eBay has no say on what sellers (including you if you list something) prices are.

  • orangetrain on 07/12/2020 - 16:21

    WTF, what's the fine based on?

    Better question, how much of the 600 products got sold?

    Was the total revenue from this more or less than the fine?

    I want to know if it's the cost of business or hurt the company for defrauding consumers.

  • tsunamisurfer on 07/12/2020 - 16:43
    +2

    Can they start knocking on the door of :

    ShoppingSquare.
    Catch.
    Groupon / Scoopon?

  • Almost Banned on 07/12/2020 - 16:44

    Pretty cynical behaviour by Kogan.
    I doubt $350k will hurt that much - I guess we'll see.

    • vikvance on 08/12/2020 - 10:02

      Kogan's annual profits are $27 million.

      He'll just laugh at the fine.

      The only effect will be to make him more careful about repeating the behaviour for fear of a larger future fine.

  • zombrex on 07/12/2020 - 18:13
    +2

    Ebay next please.
    Also very lame that new threads on this topic are being removed by mods.
    Significantly reduces the visibility of this important news. I had extreme difficult to find this old thread after wondering why my comment in new thread disappeared from my history.

    • avoidfullprice on 07/12/2020 - 20:44
      +1

      True. Visibility helps. But we don't need 6 new threads on the same day…

      • Quantumcat on 07/12/2020 - 22:16

        It would be good if the original could be bumped up into New Forum Topics when there's a duplicate merged in

  • Trying2SaveABuck on 07/12/2020 - 22:33

    350k isnt enough

  • FocusRider on 08/12/2020 - 07:30
    +2

    Kogan have so much negative press yet people still buy off them. I don't get it.

    • orangetrain on 08/12/2020 - 08:49

      People don't read press.

  • ProBoDoBo on 08/12/2020 - 15:46
    Merged from Kogan Hit with $350,000 Fine over Misleading 'tax Time' Promotion

    Online retailer Kogan has been hit with a $350,000 fine over a misleading promotion it ran to encourage customers to purchase products before the financial year ended.

    In July the Federal Court found Kogan had breached Australian Consumer Law when it advertised over a period of four days that customers could use the code "TAXTIME" to reduce the prices of products by 10 per cent at checkout.

    The court found that immediately prior to the code being released, Kogan increased the prices of 621 products – effectively making the discount redundant.

    Online retailer Kogan has been hit with a $350,000 fine over a misleading promotion it ran to encourage customers to purchase products before the financial year ended.

    In July the Federal Court found Kogan had breached Australian Consumer Law when it advertised over a period of four days that customers could use the code "TAXTIME" to reduce the prices of products by 10 per cent at checkout.

    https://www.9news.com.au/national/kogan-350000-fine-over-mis…

    Finally some ray of hope in the falsehood of discount.

    • GG57 on 08/12/2020 - 15:50

      Who gets the $350,000?

      Who gets the $350,000?

      • [Deactivated] on 08/12/2020 - 15:53

        The government.

    • follow on 08/12/2020 - 15:53
      +2

      This forum topic is not published.
      Kogan Hit with $350,000 Fine over Misleading 'tax Time' Promotion (Duplicate)

    • MS Paint on 08/12/2020 - 15:54

      How many times?

      • pegaxs on 08/12/2020 - 15:57

        Doesn't matter if you missed it, it's going to be reposted again tomorrow…

        • MS Paint on 08/12/2020 - 16:01

          And the day after that

      • brendanm on 08/12/2020 - 19:35

        It's up to about 12 I think. A few more won't hurt.

    • neo on 08/12/2020 - 16:02

      Kind of like the eBay discount codes…

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