The Australian Competition and Consumer Commission (ACCC) has issued proceedings against Scoopon in the Federal Court for allegedly making false and misleading representations to both businesses and consumers.

Formed in 2010, Scoopon is one of Australia’s largest online buying groups. This is now a $500 million industry sector in Australia. These sites typically negotiate purchase deals with businesses and subsequently offer goods and services at heavily discounted rates to their members and the public online.

The ACCC alleges that Scoopon misled consumers regarding:

  • their ability to redeem vouchers;
  • their refund rights; and
  • the price of goods.

Additionally, it is alleged that Scoopon misled businesses by:

  • representing there was no cost or risk involved in dealing with Scoopon despite there being a fee being payable to Scoopon; and
  • representing that between 20% and 30% of vouchers would not be redeemed and, accordingly, businesses would only need to reserve enough of their services to meet 80% of the vouchers that would be sold, despite there being no reasonable basis for those statements.

The ‘ACCC’s 2013 Priorities’ acknowledge that there has been a significant increase in complaints about online group buying websites. As discussed in a previous blog, “the ACCC has made online competition and consumer issues a compliance and enforcement priority. Ensuring that the digital revolution delivers competition benefits to consumers and small businesses is a focus for the ACCC,” ACCC Chairman Rod Sims has said.

The ACCC is keen to ensure that:

  • online traders take adequate steps to meet their obligations under the Australian Consumer Law; and
  • businesses have reasonable grounds to make representations to consumers and other businesses.

The ACCC is seeking declarations, injunctions, community service orders, pecuniary penalties and costs.

Scoopon is yet to respond to the ACCC’s allegations but has noted in a press release that, as a founding signatory to the ADMA Code of Practice (which is aimed at increasing consumer confidence in dealing with Group Buying platforms), its focus is on improving customer experience.

The matter has been filed in the Federal Court in Brisbane and is listed for a scheduling conference on 25 July 2013.