Kogan Sued by ACCC for Price Jacking Claims

Ally Feiam By Ally Feiam | 23 May 2019

Australian online retailer, Kogan, is being sued by the ACCC for allegedly raised prices on its products, and falsifying discounts.

The Australian Competition and Consumer Commission (ACCC) alleges that Kogan has been raising prices on more than 600 of its products by at least ten per cent, and then running ‘misleading’ discounts of ten per cent off the retail price.

The discounts in question took place between 27-30th June 2018, when the marketplace ran an online sale, where consumers could claim a ten per cent discount on most of its stock, using the discount code ‘TAXTIME’. This is a practice commonly known as ‘price jacking’ when retailers artificially inflate the original price of a product before putting it on ‘sale’, which gives customers the impression that they’re getting a discounted product, and therefore, a good deal. Moreover, the sale offered a sense of urgency, with banners, text messages and EDMs using phrases like “48 hours left!” and “Ends midnight tonight!”. Shortly after the ‘Tax Time Sale’, the products were returned to their ‘pre-promotion’ prices.

Source: ACCC

The ACCC monitored the prices of 621 products throughout the sales event, noting that many had price increases on June 26 the day before the promotion started. In one case, the price of Google Home Smart Speakers were allegedly increased by 105 per cent, from $19 to $39.

ACCC Commissioner, Sarah Court, alleged that the sales campaign breached consumer laws. “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,” said Ms Court. “Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings.”

Kogan denies these allegations, and has responded to the accusation with a statement: “At the outset, Kogan.com wishes to make clear that it strongly denies the allegations and will defend the proceedings.”

“Kogan.com is disappointed that the ACCC has nevertheless decided to issue proceedings against Kogan.com — a highly procompetitive company that benefits consumers. Our aggressive discounting, quality product range, excellent delivery standards and innovative promotions sets us apart in a highly concentrated market,” the statement read. “Kogan.com did not gain any material financial benefit as a result of the promotion. Kogan.com does not expect any adverse change to its ongoing promotional activities as a result of this matter.”

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