KGB risks OFT probe after complaints hike

Daily deals service KGB is at risk of being investigated by the Office of Fair Trading (OFT) after a spike in complaints about its advertising.

KGB

The Advertising Standards Authority has received 74 complaints about the service in the year to date. More than half (45) were received in the last three months, up from 28 in the first quarter of the year.

The ad watchdog has banned several KGB ads in the last two months for exaggerated and misleading claims. The latest ban, published this week, followed complaints about a misleading hair extension promotion.

The Advertising Standards Authority is thought to be keeping a close eye on KGB. One option available is to refer it to the OFT for further investigation, although no decision is imminent. If a referral was made, the OFT would be obliged to act.

The OFT is looking at the sector. It sent warning letters to 35 discount websites telling them to review their practices last month. It is thought KGB were one of the 35.

A spokesman for KGB says it has been working “with the support of the ASA” to implement new processes that “reflect the current interpretation of the standards.” He adds: “Adjudications currently being considered by the ASA are for older kgbdeals advertisements that pre-date this recent guidance and changes in process, and these will need to work through the system.”

KGB would be the second daily deals site to be referred to the OFT by the ASA in the past 12 months. Groupon was the subject of a lengthy investigation after being referred in 2011.

The market leader committed to changing its trading and marketing practices in March, following the probe, and the OFT says it is satisfied with the changes Groupon has made. Consumer complaints about the site have dropped in the three months since 16 March.

Industry trade body the Global Daily Deal Association (GDDA) recently unveiled a code of conduct to promote “fair, honest and ethical best practice” in the industry. Groupon, however, has yet to sign up, labelling the code “weak” in its current form.

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