Groupon attacks ‘weak’ conduct code

Groupon has slammed a code of conduct designed to arrest growing concern over the misleading marketing practices employed by some in the sector as a “weak” move that fails to go beyond existing regulation.

Groupon

Industry trade body the Global Daily Deal Association (GDDA) unveiled the code to promote “fair, honest and ethical best practice” in the industry in a bid to “improve its reputation with both consumers and merchants” last week. The voluntary, self-regulatory code covers complaints handling, refunds and advertising.

So far, just a handful of services have signed up. UK businesses comprise DiscountVouchers.co.uk, Time Out Offers, MumsandMe and DealCollector. European sites comprise Dailydeal.de, Sweetdeal and Bownty.

Groupon, arguably the sector’s highest profile brand that was ordered to change its marketing practices by the Office of Fair Trading earlier this year after attracting hundreds of complaints about its promotions, says it will not sign up until changes are made that go beyond existing OFT and Advertising Standards Authority rules.

In a blog post, Sandra Quinn, Interim Compliance Director, says that code’s lack of “meaningful” enforcement capability or input from those regulatory bodies. “We believe it could confuse consumers about their rights, about the obligations of the firms they deal with and which bodies can meaningfully deal with their complaints and concerns. Consumer rights in this area are very clear – and they go above and beyond this Code.”

She continues: “The challenge for the industry – which we are determined to do something about – is to ensure that it delivers more than basic legal rights. So we feel that this code is weak.

So we are not shutting the door on an industry association or having a code. Far from it. We want to push for more than that.”

Sanctions for breaking the code are limited by its voluntary nature. Signatories breaking the code and subsequently failing to address breaches could be forced to withdraw from the agreement. Complaints could also be forwarded to the relevant advertising or competition authority.

GDDA chief executive Stavros Prodromou said in a statement announcing the deal: “We have spent a great deal of time producing a code of conduct that is suitable and relevant to the industry….The code is the first step towards improving the sector’s reputation.” The body was unable to provide further comment.

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In a press release accompanying the publication of the code, GDDA chief executive Stavros Prodromou claimed that those signing up are “making a commitment to the future of this industry”, adding that the GDDA and code “are crucial to the sustainability and credibility of the daily deal industry”.

Successful voluntary self-regulation is dependent on two things: buy-in from the industry’s biggest players and regulatory stakeholders as well as effective sanction for those found in breach of codes.

The code of conduct appears to have been hastily assembled and needs to be rethought. It is, however, of worthy intent. Groupon, as well as other notable non-signatories such as LivingSocial need to do more to have their voices heard and not just snipe from the sidelines.

The daily deals industry has grown at a heady rate since it emerged in 2009 with over 8,000 entering the market since, claims the GDDA. It needs self-policing to ensure it continues to grow without becoming mired in disrepute. This can only be achieved if all industry players are working to the same ends by the same means.

Russell Parsons, Marketing Week news editor

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