One of Australia's biggest group buying websites, Scoopon, is being taken to court by the competition watchdog for allegedly misleading customers and businesses.
In a Federal Court action in Brisbane, the Australian Competition and Consumer Commission alleged Scoopon "misled consumers regarding their ability to redeem vouchers, their refund rights, and the price of goods advertised in relation to some of its deals".
Scoopon, which was founded by two Melbourne-based entrepreneurs, also allegedly told businesses there would be no fee or risk in running a deal on the site, when a fee was payable to Scoopon, and that up to a third of vouchers would not be claimed, the ACCC said on Friday.
"The ACCC has made online competition and consumer issues a compliance and enforcement priority," ACCC chairman Rod Sims said. "Ensuring that the digital revolution delivers competition benefits to consumers and small businesses is a focus for the ACCC."
The ACCC said it and other Australian consumer law regulators have received a "significant number" of complaints since the start of online group buying sites in 2010. The websites offer online vouchers with large discounts for goods and services.
Scoopon, which is part of the online retailer Catch Group founded by brothers Gabby and Hezi Leibovich, said it was reviewing the ACCC allegations and working to resolve the issues: "Since we began, Scoopon has improved its processes for selecting and managing deals to improve our customer experience and is a founding signatory to the [Association for Data-driven Marketing and Advertising] Code of Practice," the company said.
NSW Fair Trading said complaints against group buying sites almost halved after regulators went on a national drive to address the issues.
The daily deals market has faced a period of consolidation in recent months, with the number of group buying sites shrinking from 60 to about eight, Sam Yip of technology analysis firm Telsyte said. The eight Australian sites generate more than 90 per cent of the $500 million in revenue the industry brings in each year.
The Leibovich brothers sold a 40 per cent stake in the group to a consortium of businesses, including James Packer, for about $80 million in 2011.
The matter will be heard in court on July 25.