Small businesses have been put on notice about the importance of accurate advertising after the competition watchdog took action against one of the country’s biggest retailers.

The ACCC has instituted proceedings against Kogan Australia in the Federal Court, and is seeking penalties, injunctions, declarations, corrective notices and costs from Kogan.

The ACCC has alleged that “Kogan made false or misleading representations about a 10% discount promotion, in breach of the Australian Consumer Law”.

However, Kogan said it “strongly denies the allegations and will defend the proceedings”.

The case centres around an online promotion from June 2018, in which Kogan offered consumers a 10% discount on most of its products by using the discount code ‘TAXTIME’.

These ads were “false or misleading”, according to the ACCC, because Kogan allegedly increased the prices of more than 600 of its products immediately before the promotion – in most cases, by at least 10%.

After the promotion, Kogan reduced the prices of the affected products, many back to their pre-promotion prices, according to the ACCC.

Commissioner Sarah Court said the ACCC is alleging that Kogan’s ads were likely to have caused consumers to think they were getting products below their usual prices.

“In fact, Kogan had inflated product prices which we say created a false impression of the effective discount,” she said.

“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings.”

This is a warning that is just as relevant to small business as it is to big business.

Kogan denies the allegations

Kogan, though, said the ACCC had ignored “critical facts” that were “highly relevant” in assessing how consumers would’ve viewed the promotion.

“Kogan.com’s marketing collateral in connection with the promotion was carefully considered, and was drafted specifically to avoid the type of confusion alleged by the ACCC,” the company said.

“Kogan.com at all times made clear that the price reduction applied at the time of checkout.

“At checkout, all customers were made aware of the full price they would pay for the product and the price reduction that would be achieved by using the discount code. There was no confusion caused.”