The day-to-day trading company Groupon was told to change its work practices after an investigation by the Fair Trade Office found that it had breached consumer protection regulations.
The investigation began in December last year, when the Advertising Standards Authority referred the case to the OFT, after receiving a large number of complaints about the company.
Consumers complained that Groupon offers were not always available when they wanted them and asked if the discounts were really as good as the advertised ones.
«The investigation found widespread examples of Groupon’s practices which, in the OFT’s view, violated consumer protection regulations,» the watchdog said in a statement.
It is important for consumers to benefit from consumer protection legislation as well as reduced offers.
«OFT has specific concerns about practices involving reference pricing, advertising, reimbursements, unfair terms and the diligence of its interactions with traders.»
OFT asked Groupon to ensure that «the reference prices (advertisements comparing an original reference price with a selling price), including savings, are fair, honest and transparent».
The OFT also called for «Groupon to make a fair, honest and realistic assessment of a trader’s ability to supply goods or services in the suggested quantity or time frame» and for all terms and restrictions to be clarified at the point of sale. .
The company must also ensure that health and beauty product claims are supported by an adequate justification and that reimbursement policies comply with distance selling regulations.
«Collective purchasing and discount systems can provide real benefits for both consumers and traders. The market is growing rapidly, but it is important for consumers to benefit from consumer protection legislation as well as reduced offers, ”said Cavendish Elithorn, senior director of the Consumer and Goods Group at OFT.
«Groupon has fully cooperated with our investigation and is making changes to its business practices to address our concerns.»
According to Groupon, the problems arose because it grew too fast to maintain quality control. The company said it will implement changes to improve the situation.
«As a young and innovative company, Groupon acknowledges that our processes and procedures have not always kept pace with our rapid growth,» UK CEO Roy Blanga said in a statement to PC Pro .
«We have independently made many improvements since the beginning of 2011 and have worked transparently and constructively with OFT to identify areas that need further change. We take your concerns very seriously and will be happy to implement the recommended changes. «