Scoopon 'misled' buyers and suppliers
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.
Frequently Asked Questions about this Article…
The Australian Competition and Consumer Commission (ACCC) alleges Scoopon misled customers and businesses about voucher redemption, refund rights and the advertised price of goods. The ACCC also says Scoopon told businesses there would be no fee or risk when a fee was actually payable, and that it overstated how many vouchers would go unclaimed.
Scoopon is part of the Catch Group. It was founded by Melbourne-based entrepreneurs Gabby and Hezi Leibovich. In 2011 the brothers sold a 40% stake in the group to a consortium that included businessman James Packer for about $80 million.
The matter is before the Federal Court in Brisbane, with the case scheduled to be heard on July 25.
Scoopon said it is reviewing the ACCC’s allegations and working to resolve the issues. The company also said it has improved processes for selecting and managing deals to improve customer experience and is a founding signatory to the Association for Data‑driven Marketing and Advertising Code of Practice.
The ACCC has made online competition and consumer issues a priority, and regulators have previously driven down complaints. The article notes the daily deals market has consolidated — shrinking from about 60 group‑buying sites to roughly eight — and regulators’ activity has helped reduce complaints against these sites.
According to the ACCC, it and other consumer law regulators have received a 'significant number' of complaints since online group‑buying sites appeared around 2010. NSW Fair Trading also said complaints almost halved after a national regulatory drive to address the issues.
The article cites industry analysis saying the sector generates about $500 million in revenue each year. It also notes consolidation: the number of sites fell from around 60 to about eight, with those eight sites generating more than 90% of the industry's revenue.
The article presents the legal action as a regulatory and reputational issue involving Scoopon, which is part of Catch Group. For everyday investors, regulatory enforcement cases can be material because they may affect a company’s operations, reputation and the wider market for daily deals — so many investors watch such developments closely.
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