ACCC not buying into online group buying

Only seven months after the ACCC obtained judgment against online group buying operator Scoopon, the ACCC has targeted another online group buying operator, this time Spreets.

• The ACCC has commenced Federal Court proceedings against Spreets alleging it engaged in misleading conduct in its dealings with consumers about:
• the price of certain deals;
• the ability of consumers to redeem vouchers; and
• the applicability of consumer guarantees under the Australian Consumer Law, specifically in relation to refund rights.

The proceedings relate to conduct by Spreets in 2011 and 2012, when Spreets operated one of Australia’s largest online group buying websites.

The ACCC action against Spreets follows its recent success in December 2013, when Scoopon was ordered to pay a penalty of $1 million for making misleading representations to both businesses and consumers. The Federal Court declared that Scoopon had made false or misleading representations to:

• consumers, about refund rights and price of goods advertised;
• businesses, regarding the cost or risk involved in running a deal with Scoopon; and
• a specific business, regarding the likely percentage of vouchers that would be sold but not redeemed.

Scoopon agreed to both the findings of misleading conduct and the penalty.

ACCC Chairman, Rod Sims, said at the time of the Scoopon penalty that:

“Online competition and consumer issues are a priority for the ACCC. Online traders must understand their obligations are the same as traditional retailers’ and must not mislead customers or other businesses.”

These cases act as a reminder for businesses that:

• businesses operating online have an obligation to avoid misleading conduct, just as any other business does
• businesses can get caught for misleading representations made not only to consumers, but also to other businesses, such as suppliers
• businesses need to check all communications and representations they make, such as in advertising, warranty terms, communications with other businesses or statements made in a shop or on a website
• businesses need to think ‘outside the box’ and consider where they make representations
• businesses need to ensure that their notices and statements to consumers about refund and exchange rights do not contradict the consumer guarantees available under the Australian Consumer Law.

We will continue to follow the Spreets case with interest.