MyCityDeal Ltd (Groupon UK): misleading pricing practices

Office of Fair Trading (OFT) closed consumer enforcement case.

Case information

Case reference number: CRE-E-26964

Complainant: OFT own-initiative investigation

Investigation into: MyCityDeal Ltd trading as Groupon UK ('Groupon'), company number No. 07112363, with a registered office address at No 1, Liverpool Street,
London, EC2M 7QD (www.groupon.co.uk).

Update June 2012

The legal undertakings provided by Groupon in March 2012 have come into effect. Groupon and the ASA will continue to provide the OFT with details of any consumer complaints relating to matters within the scope of the undertakings three, six and nine months following the provision of undertakings. This is so the OFT can monitor whether the undertakings are effective and Groupon is complying with them.

Separately, and as the market continues to develop, the OFT has written to 35 daily deal companies to ask them to review their practices following the OFT action against Groupon. The OFT has informed the daily deal companies that the Groupon undertakings set a clear standard for the entire sector. The OFT is monitoring complaints about unfair commercial practices in this market and, where necessary, will take targeted national enforcement action against firms using practices that constitute serious breaches of the law. The OFT does not investigate individual complaints and consumers that require consumer advice should contact the Citizens Advice Consumer Service.

Issue

There were concerns about Groupon's trading practices including reference pricing, ensuring sufficient supply, time-limited offers, products/services not as advertised, products/services not delivered, substantiation of claims, consumers not getting refunds when appropriate and unfair terms.

Relevant Law

  • The Consumer Protection from Unfair Trading Regulations 2008 (CPRs)

  • The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs)

  • The Consumer Protection (Distance Selling) Regulations 2000 (DSRs) 

  • Enterprise Act 2002

Case Description

OFT opened this investigation following complaints it received in relation to Groupon's trading practices. As part of its investigation, OFT also considered concerns that have been raised by the Advertising Standards Authority ('ASA'), in light of complaints the ASA received.

As a result of its investigation, OFT formed the view that there were specific examples of Groupon's practices which appeared to be in breach of the CPRs, the UTCCRs and DSRs. In particular, OFT identified concerns with reference pricing, advertising, refunds, unfair terms, and the diligence of its interactions with merchants.

During the investigation Groupon engaged constructively with the OFT. They cooperated throughout.

As required in this case under the Enterprise Act 2002, the OFT consulted with Groupon to ensure that those practices are not continued or repeated. Following this consultation, Groupon signed undertakings to comply with the law. The undertakings require that Groupon does not continue or repeat the conduct of concern in this case.

Groupon has also agreed to provide the OFT with details of any consumer complaints relating to matters within the scope of the undertakings three, six and nine months following the provision of undertakings. This is so the OFT can monitor whether the undertakings are effective and Groupon is complying with them.

Groupon has been warned that should evidence come to light that it is breaching any of the undertakings, OFT may consider applying to court for enforcement orders to ensure compliance with consumer protection legislation.

OFT has now closed its investigation into this matter having secured these undertakings, subject to reviewing any consumer complaint information from Groupon in the following three to nine months.

In December 2011, the ASA started to refer to OFT, complaints it received that were within the scope of OFT's investigation. It will continue to refer such complaints to OFT over the next three months whilst Groupon improves its processes, after which, the ASA will resume investigating any complaints it receives.

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