Voucher company Groupon has been given three
months to improve the way it operates by a UK
The OFT has specific concerns over "pricing, advertising, refunds,
unfair terms, and the diligence of its interactions with merchants".
Groupon has agreed to change to ensure honesty with customers.
Concerns
Groupon, which is the trading name of MyCityDeal Ltd, negotiates discounts
with businesses. It then sends an email to its customers outlining the various
deals on offer each day.
If enough of these people sign up to the offer, they can then present a
voucher to the trader and benefit from the advertised discount.
However, concerns have been raised in the UK
In one case, the Advertising Standards Authority said it had found that
there was no evidence that advertised deals were available. This included deals
claiming that consumers could buy a bouquet of flowers for £8 and that they could
take advantage of an "all you can eat in London
Agreed changes
Groupon has agreed to make sure that prices in its adverts are accurate
and honest and that any limitations on availability are made clear.
Its undertakings include:
- Ensuring that the
advertised discount is accurate, honest and transparent
- Conducting an
accurate, honest and realistic assessment that a trader can offer the
goods and services in the quantity and timeframe suggested
- Clearly outlining
any limitations on deals
- Adequately
substantiating any health and beauty product claims
- Ensuring terms
and conditions are fair
- Applying the
rules on refunds and cancellation rights for anyone buying online
The OFT warned Groupon that it would monitor complaints closely and that
any breach of the undertakings could lead to court enforcement orders.
"Collective buying and discount schemes can offer real benefits for
both consumers and merchants," said Cavendish Elithorn, from the OFT.
"The market is growing rapidly, but it is important that consumers
benefit from consumer protection law as well as from the discounted offers.
"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."
'Shop around'
Groupon customer Sarah Luty, a 31-year-old from Luton ,
said she had become much more selective on which deals to buy after finding it
difficult to redeem one voucher.
"I bought a spa day from Groupon which included a massage, glass of
bubbly and full use of the facilities," she said.
"When I bought it, they had sold so many I had to book a midweek slot
five months later, as that was all that was available. Meanwhile in those five
months, Groupon continued to sell spa days to the same place."
Another customer - Karen Bellerby - told the BBC News website that Groupon
had some good deals, but it was important for customers not to blindly accept
everything was cheap.
The charity worker from Colchester said
that one of the best deals she had bought was having her hair done for £29, but
the electronic goods were often no cheaper than elsewhere, and there were some
restrictions on travel deals.
"Sometimes you might get a similar deal by going direct. It is like
any shopping on the internet - you should shop around," she said.
Roy Blanga, Groupon's UK
"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."
In February, its first set of results since listing on
Nasdaq stock exchange in November, Groupon reported a net loss of $