Investors in online retailer, Kogan ignored an embarrassing $350,000 penalty from the Federal Court on Monday and pushed up the share price by 3.8% to $18.04.
The Federal Court penalty resulted from action against the company from the ACCC, competition watchdog over misleading claims made about a tax time sale promotion in 2018.
Kogan was found to have inflated the price on 621 products immediately before offering users a 10% discount on them. The company then reduced the prices again after the sale ended.
Commission chair Rod Sims said the penalty still sent a strong message.
“This decision sends a strong signal to businesses like Kogan, which regularly conduct online sales promotions, that they must not entice consumers to purchase products with a promise of discounts that are not genuine,” Mr Sims said in a statement on Monday.
The Australian Competition and Consumer Commission (ACCC) started court action against Kogan in May 2019, alleging it made false and misleading representations when advertising a 2018 tax time discount code.
The Federal Court agreed with the CCC’s allegation, ruling that the 10% off ‘sale’ was misleading because it saw more than 600 products cost the same as, or more than, their pre-promotion price.
The court found the brand upped the prices of many of those products immediately before the sale, most by at least 10%. After the promotion ended, the items reverted to their pre-sale prices.
“Kogan’s contravening conduct must be viewed as serious, as misrepresentations about discounts offered on products not only harm purchasers acquiring such products on the basis that they are getting a genuine discount but also may impact on consumer confidence in discount promotions when legitimately made – that is, when products are being offered for sale with a genuine discount on price,” Justice Davies said in her judgment.
Kogan advertised the discount in emails sent to more than 10 million consumers and in SMS messages sent to more than 930,000 consumers.
“Consumers were not receiving a genuine 10% discount as promised, and this affected high-value products such as Apple MacBooks, cameras and Samsung Galaxy mobile handsets,” said the ACCC’s chair, Rod Sims.
“This decision sends a strong signal to businesses like Kogan, which regularly conduct online sales promotions, that they must not entice consumers to purchase products with a promise of discounts that are not genuine.”
It is the third action against Kogan or its entities in 11 years.