OFT orders Groupon to ensure its deals are "accurate, honest and transparent"

19 March 2012 by
OFT orders Groupon to ensure its deals are "accurate, honest and transparent"

Discount website Groupon has been ordered to ensure its deals are "accurate, honest and transparent", after the Office of Fair Trading (OFT) found "widespread" breaches of consumer protection rules.

MyCityDeal, which trades as Groupon, has been handed a three-month deadline to change some of its practices, following an investigation by the OFT that began last July, prompted by consumer complaints and a referral by the Advertising Standards Authority (ASA).

Roy Blanga, Groupon's UK managing director, said the company acknowledged that its processes and procedures had not always kept pace with its rapid growth and that it took the concerns of the OFT very seriously.

"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," he told The Guardian.

Cavendish Elithorn, senior director in the OFT's goods and consumer group, said that while collective buying and discount schemes could offer real benefits for both consumers and merchants, it was important that consumers also benefited from consumer protection law.

He said: "Groupon has co-operated 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."

Groupon, which uses "collective buying power" to offer discounted deals for consumers by promising firms a minimum number of customers taking up the offer, has come under fire before.

The ASA previously upheld a string of complaints about its advertising and has raised concerns about Groupon's failure to conduct promotions fairly and provide evidence that offers are available.

Ads such as one that offered "all you can eat in London for £3" were challenged after complainants were unable to find the deals when they followed the link to the website.

The OFT has told Groupon to inform it of complaints it receives and said it would consider applying for court enforcement orders if evidence is found that the undertakings have been breached.

The consumer watchdog added that Groupon had engaged "openly and constructively" throughout the investigation.

Entrepreneur Luke Johnson slams discount culture >>

Does discounting de-value the brand? >>

By Janie Manzoori-Stamford

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