Scoopon Betrayal Leads to 1m Penalty – ACCC

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By Athena Yenko | December 18, 2013 2:13 PM EST

Scoopon was fined $1 million for misleading both businesses and consumers, the Federal Court ruled on Dec 17.

The Australian Competition and Consumer Commission (ACCC) was however appreciative of Scoopon's timely cooperation about the issue.

"The ACCC acknowledges Scoopon's cooperation in resolving the matter by consent, which has enabled a more timely outcome to be reached," ACCC Chairman Rod Sims said.

"The ACCC understands that Scoopon has worked to improve its systems and processes which gave rise to this conduct to meet its obligations under the ACL. However, this penalty serves as a warning to other businesses in the industry to improve their practices or face action from the ACCC," Mr Sims further explained.

"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. The ACCC will continue to take further action in this area to improve business practices and protect small businesses and consumers."

The Court ruled that Scoopon breached the Australian Consumer Law (ACL) by making false or misleading representations to:

  • consumers about their refund rights, and the price of goods advertised in relation to some of its deals;
  • businesses that there was no cost or risk involved in running a deal with Scoopon, when this was not the case; and
  • a business that 30 per cent of vouchers that would be sold would not be redeemed, when there was no reasonable basis for this representation.

The Court also ordered:

  • injunctions restraining Scoopon and its employees from making similar misleading representations for a period of two years;
  • Scoopon to pay an agreed amount of the ACCC's costs; and
  • Scoopon to further develop and enhance its existing compliance program to ensure compliance with the ACL.

Scoopon, as part of a community service order, was asked to conduct an educational seminar on ACL issues for other online group buying traders who are members of the Association for Data-driven Marketing & Advertising (ADMA).

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