Groupon to be investigated by UK regulator over trading practices

Groupon is to be investigated by the UK’s Office of Fair Trading after the company repeatedly flouted advertising regulations a staggering 48 times in just 11 months.

The Advertising Standards Authority, the watchdog which investigates and passes judgement on complaints around brand marketing, says after repeated breaches of its code it has decided to refer Groupon (trading under the name of MyCityDeal in the UK) to the OFT.

The reason for the escalation is threefold, the ASA says:

  • Failure to conduct promotions fairly, such as not making clear significant terms and conditions
  • Failure to provide evidence that offers are available
  • Exaggeration of savings claims

The ASA says it has upheld 11 complaints against Groupon this year alone, as well as a further 37 cases which have been “informally resolved”.

Regulators have “serious concerns” about Groupon’s track record and “its ability to adhere to the Advertising Code”, the ASA says in a statement.

The 11 upheld complaints during 2011 have ranged from cosmetic product promotions to the inevitable teeth whitening deals. Five, however, are travel and entertainment-related, including a hugely discounted hotel stay with accompanying meal.

In the case of the hotel, the complainant questioned whether the discounted price in the promotion was realistic – something Groupon later conceded was incorrect and promised to be clearer with its messaging in the future.

Clearly the ASA is fed up with repeatedly attempting to bring Groupon into line with the advertising code. The arrival of the OFT on the scene is a serious matter, with a statement saying it is investigating whether Groupon is complying with consumer protection legislation and trading practices.

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Kevin May

About the Writer :: Kevin May

Kevin May was a co-founder and member of the editorial team from September 2009 to June 2017.

 

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