More ACCC action against ‘deal of the day’ group buying websites

August, 2014

By Martin Williams

Spreets Pty Limited is the latest online business to be pursued by the Australian Competition and Consumer Commission (ACCC) in relation to its ‘daily deals’ website. The ACCC has instituted proceedings in the Federal Court against Spreets claiming that it made false or misleading representations in connection with the price and hidden costs of certain offers, voucher rules, and the circumstances in which a customer is entitled to a refund under the Australian Consumer Law. The matter was heard before Justice Collier at a Directions Hearing on 30 July.

Online ‘daily deals’ sites usually negotiate special offers in bulk with third party merchants that they then  market directly to customers via the ‘daily deals’ website, email and social media. Spreets was one of the major online group buying websites to emerge in Australia in the last few years. During 2011 and 2012, Spreets offered consumers heavily discounted vouchers and offers in relation to activities and services for everything from day-spa breaks to restaurants to skydiving. Spreets has recently changed its business model and it now collates and shares deals offered by other online partners and no longer offers its own deals directly to consumers.

In December last year, Scoopon Pty Ltd was ordered to pay pecuniary penalties of $1 million by the Federal Court for breaching the Australian Consumer Law. The Court held that Scoopon made false or misleading representations to consumers that they were not entitled to a refund if the merchant’s activity or service was not available. Scoopon was also found to have made false or misleading representations to its merchants that 30% of vouchers sold on Scoopon would not be redeemed when there was no reasonable basis for this representation, and to consumers that exaggerated the description of goods and the number of goods available at the price advertised on Scoopon.

In a press release in relation to the Spreets proceedings, ACCC Chairman Rod Sims noted that “Businesses selling to consumers online have the same obligations under the Australian Consumer Law as all other businesses, and consumer guarantees, including refund rights, apply when consumers purchase online.”

Clearly, group buying sites are at the forefront of the ACCC’s recent drive to ensure online retailers comply with the Australian Consumer Law. Online retailers need to take care that representations and statements set out on their website and in their marketing material are factually correct and accurate, and that the remedies available to consumers under the Australian Consumer Law are not unlawfully excluded.

Contact Mills Oakley

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Simon Champion |  Partner
Corporate Advisory
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Gavin Douglas |  Partner
Corporate Advisory
D: (02) 8289 5855

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