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Groupon monstered in OFT complaints probe

Watchdog orders deals site to improve by June

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Updated: Groupon will change the way it does business in Blighty after the Office of Fair Trading concluded a lengthy investigation into the company, which trades as MyCityDeal Ltd.

The consumer watchdog kicked off a probe into Groupon in July following a high number of complaints from consumers about the "daily deals" firm's claims in its advertising.

Separately the Advertising Standards Authority - as of December - had formally investigated and upheld complaints against Groupon’s ads on 13 different occasions. It informally resolved 37 cases. The ASA referred Groupon to the OFT late last year.

The OFT said today that it accepted a number of undertakings from Groupon to change some of its trading practices in the UK.

"The investigation found widespread examples of Groupon's practices which in the OFT's view breached consumer protection regulations," the watchdog said. "The OFT has specific concerns over practices involving reference pricing, advertising, refunds, unfair terms, and the diligence of its interactions with merchants."

Groupon, which was founded by Andrew Mason and is headquartered in Chicago, has been given three months to implement the changes. From mid-June the company will be required to do the following, the OFT said:

  • Reference prices (adverts that compare an original reference price against a sale price), including savings, are accurate, honest and transparent.
  • Groupon carries out an accurate, honest and realistic assessment of a merchant's ability to provide goods or services in the quantity or time frame suggested.
  • Products display clearly, prominently and on the same screen or before purchase all the limitations which apply to any deal.
  • Groupon takes reasonable steps to ensure that health or beauty product claims are supported by adequate substantiation.
  • Terms and conditions are fair.
  • Groupon applies refunds policies and cancellation rights in accordance with the Distance Selling Regulations.

Much of what was listed by the OFT would be considered by many as basic expectations of a business trading in the UK. The regulator added that it would "monitor complaint numbers closely and has required Groupon to inform the OFT of any complaints it receives on each of these practices".

Measures including applying to court for an enforcement order would be taken if evidence emerged that showed a breach of those undertakings had occurred, the OFT warned.

"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," said OFT senior goods and consumer group director Cavendish Elithorn.

"Groupon has cooperated 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 Register asked Groupon to comment on this story. The evoucher firm sent us this canned statement from UK MD Roy Blanga:

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.

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