ONLINE deals website Groupon has been censured and given three months to improve its business practices after an investigation by Britain’s Office of Fair Trading.
The watchdog acted after receiving complaints from customers and said it had discovered “widespread” examples of Groupon breaching consumer protection regulations.
The Advertising Standards Authority also referred the company to the OFT after Groupon was found to have breached advertising codes more than 50 times in a year.
The OFT said it was concerned over “reference pricing, advertising, refunds, unfair terms, and the diligence of its interactions with merchants”.
It has ordered the website to make changes in six areas and wants to see:
- Accurate, honest and transparent reference prices on deals where adverts which compare an original ‘reference’ price against the sale price
- Realistic assessments of suppliers abilities’ to provide goods or services offered in the deal in the quantity or timeframe suggested
- Clearly and prominently displayed limitations applying to the deals
- Reasonable steps taken to back up claims related to any beauty or health products offered
- Refund and cancellation policies in accordance with current regulations
- Fair terms and conditions.
Cavendish Elithorn, senior director in the OFT’s goods and consumer group, said: “Collective buying and discount schemes can offer real benefits for both consumers and merchants. The market is growing rapidly, but it’s important that consumers benefit from consumer protection law as well as from the discounted offers.
“Groupon has co-operated fully with our investigation and is making changes to its business practices to address our concerns. We will be monitoring the situation closely to ensure that consumers benefit from these improvements.’
The company accepted it had problems and said it had strengthened its customer services team.
Roy Blanga, UK managing director, said: “As a young and innovative business, Groupon acknowledges that our processes and procedures have not always kept pace with our rapid growth. We have independently made many improvements since early 2011 and have worked transparently and constructively with the OFT to identify areas that require further changes.
“We take their concerns very seriously and will be willingly implementing the recommended changes.”
Chicago-based Groupon operates in 47 countries and had more than 33m active customers at the end of last year.
Its last set of accounts revealed that it had doubled its revenues from $172.2m to $506.5m in the final three months of 2011 but confounded analysts’ expectations that it would move into profit, instead reporting a $42.7m loss for the period.