OFT steps up clampdown on daily deals sites

The Office of Fair Trading has stepped up its clampdown on the daily deals industry, having sent warning letters to 35 discount websites telling them to review their practices.

Groupon

The move follows the watchdog’s investigation into the industry’s biggest site Groupon, 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.

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

In its letter to the rest of the daily deals industry, the OFT says the Groupon undertakings “set a clear” standard for the entire sector.

Undertakings included ensuring adverts that compare an original reference price against a sale price are accurate, honest and transparent; applying refunds policies and cancellation rights in accordance with Distance Selling Regulations; taking reasonable steps to ensure health or beauty product claims are substantiated; and carrying out an assessment of a merchant’s ability to provide goods or services in the quantity or time frame advertised.

The watchdog is monitoring complaints about unfair commercial practices in the daily deals market and says it will take “targeted national enforcement action” against firms using practices that constitute serious breaches of the law.

Elsewhere in the sector, the industry’s trade association the Global Daily Deals Association has launched a code of conduct in a bid to quell concern about the misleading marketing tactics employed by some deals companies. However, some of the sector’s biggest players, including Groupon, LivingSocial and KGB Deals, have not signed up to the code.

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