Online electronics retailer Kogan Technologies has been ordered to modify its advertising by the Australian Competition and Consumer Commission, after it was accused of possible misleading conduct.
Kogan Technologies, founded and run by 26-year-old Ruslan Kogan, manufactures and sells electronics assembled with different parts from major companies such as Samsung, LG and Sony.
The ACCC has said that the retailer’s advertisements in the Herald-Sun newspaper and on its website may mislead customers. The newspaper advertisements used price comparisons between its own products and similar products from other manfucutrers (for example, “Now $X (Save Y%)” and “Save over X”).
But the ACCC says that the savings claims may have been misleading because the products had not been offered by Kogan Technologies at the higher price. “The savings were based on an estimated average price a consumer might pay for a product with similar specifications from another manufacturer,” the corporate watchdog said.
ACCC chairman Graeme Samuel says the advertisements may have breached sections of the Trade Practices Act.
“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,” Samuel said in a statement.
“However, retailers must make sure these comparisons are accurate so consumers can make an informed choice.”
Kogan Technologies has agreed that it will not advertise its products at a discount unless that product has been advertised for sale at a higher price, and that it will implement a trade practices law compliance program.
The company has also agreed not to make representations about the savings available to consumers unless it states the basis by which those savings are calculated.
“Retailers must keep in mind that a comparison in value does not equate to a
comparison in price,” Samuel said.
“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.”
Kogan did not return calls by the time of publication.
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
