Groupon changes marketing after OFT probe

Groupon has agreed to change its trading practices following an investigation into the business by the Office of Fair Trading (OFT) that found the daily deals service had breached consumer protection regulations.

Groupon

The daily deals site has signed six undertakings to ensure the claims made on its website about savings and the benefits of its products and services are substantiated and that its terms and conditions are fair, to ensure it complies with UK consumer protection law (see below).

If Groupon is found to be in breach of any of these undertakings, the OFT will consider “appropriate measures” of punishment, including applying to a court for enforcement orders.

The OFT’s investigation was launched in July 2011 after it received repeated complaints from consumers.

The Advertising Standards Authority referred Groupon to the OFT in December following its “repeated breaches” of the advertising code.

Despite the referral the number of complaints about Groupon’s advertisements have accelerated in the last three months.

Groupon’s UK managing director Roy Blanga says: “As a young and innovative business, Groupon acknowledges that our processes and procedures have not always kept pace with our rapid growth.

“We have independently made many improvements since early 2011 and have worked transparently and constructively with the OFT to identify areas that require further changes. We take their concerns very seriously and will be willingly implementing the recommended changes.”

The OFT says while the daily deals market is growing rapidly, it is important consumers benefit from consumer protection law as well as from the discounted offers.

Cavendish Elithorn, senior director of the OFT’s Goods and Consumer Group, says: “Groupon has cooperated fully with our investigation and is making changes to its business practices to address our concerns. We will be monitoring the situation closely to ensure that consumers benefit from these improvements.”

Groupon’s undertakings, enforced by the OFT

  • Reference prices (adverts that compare an original reference price against a sale price), including savings, are accurate, honest and transparent.
  • Groupon carries out an accurate, honest and realistic assessment of a merchant’s ability to provide goods or services in the quantity or time frame suggested.
  • Products display clearly, prominently and on the same screen or before purchase all the limitations which apply to any deal.
  • Groupon takes reasonable steps to ensure that health or beauty product claims are supported by adequate substantiation.
  • Terms and conditions are fair.
  • Groupon applies refunds policies and cancellation rights in accordance with the Distance Selling Regulations.

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