Kogan Nobbled Again, But It’s All Publicity For The Dodgy Online Store
COMMENT: Online retailer Kogan has again been nobbled by the Federal Court over dodgy practices and I get the distinct impression, that the Company could not give a stuff, as to how much they get fined as the founders of the business are wallowing in millions and their share price is up despite a double digit fall on Friday.
Kogan shares fell almost 10 per cent closing down 4.6 per cent to $17.02 on Friday night this is significantly up from when COVID-19 restrictions kicked in back in March when Kogan shares were trading at $4.
This is a Company that appears to have dodgy practices engrained in their DNA but despite this consumer still trust this questionable Company.
Founder Ruslan Kogan has admitted to me in the past that he deliberately engaged in false claims to get publicity before the Company was floated.
A known publicity junkie before his Company was floated Kogan has remained very quiet about his latest run in with consumer regulators.
His past claims about Apple and his welching on a one million dollar bet with The Good Guys CEO Terry Smart were all publicity stunts and they worked.
Today the Australian Competition & Consumer Commission website lists pages of dodgy actions by the online retailer who also owns the Dick Smith web site and brand name.
Back in 2009 a Ruslan Kogan owned Company Kogan Technologies Pty Ltd was forced to change its advertising after the Australian Competition and Consumer Commission raised concerns Kogan’s advertising mislead consumers about savings.
On the 14 June 2016 Kogan.com Pty Ltd paid penalties totaling $32,000 following the issue of three more infringements for dodgy business practices.As part of a Fathers’ Day promotion in 2015, Kogan advertised on its eBay store that consumers would receive a 20% discount on several computer monitors if they were purchased between 24th and 29th August 2015:
Before or at the start of the promotion, Kogan increased the prices of the three computer monitors featured on its eBay store.
As a result, although consumers received a 20% discount off the newly increased prices, they in fact only received a 9% discount off the previously advertised prices for each of the three computer monitors the ACCC ruled.
This is the same Company who were caught price gouging products such as sanitizer’s and fridges during the early days of the COVID-19 outbreak.
This time round the Company is facing a substantial financial penalty, possibly in the millions of dollars, after the Federal Court ruled that the retailer breached consumer law over a special “tax time” promotion that actually raised prices by about 10 per cent before offering a discount to shoppers.
In more than 10 million targeted emails and almost 1 million text messages to its customer base, Kogan was found to have conveyed false or misleading representations around the size of the product discounts offered in the promotion in June 2018.
Kogan ran the online promotion from June 27 to 30, telling consumers they could use the code ‘TAXTIME’ to reduce prices by 10 per cent at checkout. The promotion was advertised on Kogan’s website, in emails and text messages.
Towards the end of the promotion, Kogan’s email ads included statements like “48 hours left!” and “Ends midnight tonight!” to entice consumers to make a purchase during the sale.
What was not known by shoppers was that many of the products offered in the sale had had their sticker price raised before discounts were then advertised.
“The court found that the ads conveyed false or misleading representations because Kogan had increased the prices of more than 600 of its products immediately before the promotion,” the Australian Competition & Consumer Commission said in a statement following the court’s decision that went against Kogan.
In most cases, the prices of these products had been increased by at least 10 per cent. Kogan had also reduced the prices of these products shortly after the promotion ended, many back to their pre-promotion prices.
“We brought this case because we were concerned that the advertised price reductions were not genuine savings,” ACCC chairman Rod Sims said.
“Many consumers who took up the offer on one or more of the 600 or so products in many cases actually paid the same as, or more than, what they would have paid immediately before and after the promotion.”
Kogan said in a statement that the profits derived from the promotion was immaterial and the ruling would not have any adverse effect on its promotional activities.
Kogan said it was reviewing the court ruling. A penalty is yet to be decided.