ACCC blasts Kogan Technologies: bad advertising hurts retailers

By Patrick Avenell

The ACCC has this morning blasted direct consumer electronics retailer Kogan Technologies for misleading consumers in its advertising. Because of its retail-less business model, Kogan often boasts of having cheaper prices than competitors, but the ACCC disagreed with its methodology, saying its marketing was misleading consumers and preying on uninformed retailers during a period of economic uncertainty.

Of most concern to the ACCC in this case was price comparison advertising on its website, in print, and in a puff piece run by tabloid current affairs program Today Tonight. In this advertising, Kogan Technologies estimated savings based on products offered by other manufacturers. These estimations did not take into additional value propositions, such as brand goodwill, warranties and proprietary technology.

"Comparison pricing is a strong marketing tool, particularly in times of financial uncertainty when consumers don’t want to spend more than they have to," said ACCC chairman Graeme Samuel. "However, retailers must make sure these comparisons are accurate so consumers can make an informed choice."

Kogan Technologies has agreed to, at risk of further sanctions, the following:

-Not to advertise its goods at a discount unless that product has been advertised for sale or sold in reasonable quantities at the higher price for a reasonable amount of time before the representation.

-Not to make representations regarding the savings which are available to purchasers of Kogan goods unless it clearly states the basis on which those savings are calculated.

-To implement a trade practices law compliance program.

"Retailers must keep in mind that a comparison in value does not equate to a comparison in price," said Samuel.

"Value comparisons should be clearly identified by, for example, identifying the brand name, features, and model. Price comparisons, on the other hand, should only be made where the good or service has previously been offered or sold for the higher price."

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