Groupon: Consumer Protection Case

Competition and Markets Authority (CMA) open consumer enforcement case.

From:
Competition and Markets Authority
Published
1 June 2012
Last updated
8 October 2021 — See all updates
Case type:
Consumer enforcement
Case state:
Closed
Market sector:
Retail and wholesale
Outcome:
Consumer enforcement - undertakings
Opened:
1 July 2011
Closed:
8 October 2021

Undertakings accepted from Groupon

8 October 2021: Groupon has formally committed to the CMA to change a number of its practices. Groupon has committed to improving its customer service and to offer refunds to certain customers who were previously not given refunds.

Groupon will communicate the refund offer to certain customers within the next 7 days and pay refunds within 14 days of their response. Groupon will communicate with customers based on its customer service codes listed in Schedule 2 of the undertakings.

Groupon has also made a number of other commitments, including to:

  • acknowledge future customer complaints within 24 hours and deal with those complaints within 14 days;
  • set up a new deals investigation team;
  • carry out mystery shopping exercises;
  • ensure descriptions of goods and services on the Groupon website and app are accurate; and
  • ensure that orders cannot be placed unless goods are in stock and services are available.

Groupon will also appoint a compliance officer and report regularly to the CMA on its progress.

Groupon has engaged constructively with the CMA during its investigation.

These undertakings have been given by relevant Groupon entities: Groupon, Inc, MyCityDeal Limited and Groupon Goods Global GmbH.

Consultation Letter

9 August 2021: The CMA is consulting with a number of Groupon entities in relation to possible breaches of consumer protection law. The CMA’s concerns include that Groupon has failed to provide cash refunds, and other remedies, to customers; has failed to ensure goods are delivered within advertised timeframes, goods are as advertised and are of satisfactory quality; and has failed to ensure customer service is satisfactory when customers contact them about problems.

Groupon now has the opportunity to respond to the CMA’s detailed concerns.

Note

The CMA is consulting with Groupon UK, which is registered in the UK as MyCityDeal Limited. In addition, we are consulting with other relevant entities within the Groupon corporate group that we consider have engaged in conduct that may be contrary to consumer law: Groupon Goods Global GmbH (registered in Switzerland) and Groupon, Inc (registered in USA).

Launch of investigation

12 April 2021: The CMA has opened an enforcement investigation into Groupon, following concerns that some of its practices may be breaching consumer law and the undertakings signed in 2012.

In 2012, the Office of Fair Trading (the predecessor to the CMA) announced that Groupon had provided undertakings following the OFT’s investigation into unfair and misleading pricing practices. In the undertakings, Groupon committed to change its practices, including to ensure information on its website is not misleading, and to comply with consumers’ legal cancellation and refund rights.

The CMA is now investigating whether Groupon is complying with its previous commitments, and with consumer protection law. The investigation will examine issues including:

  • whether Groupon is providing refunds to consumers in accordance with consumer protection law; and
  • whether Groupon ensures that descriptions of items or services on its website are accurate, and that products are delivered within the advertised timeframes.

We have written to Groupon regarding our concerns, and have asked for information to understand more about their practices. Once we have completed our analysis of the information provided, we will consider what, if any, further action might be required. At this stage, we have not reached a view about whether there have been any breaches of consumer law by Groupon.

Contact

Senior responsible officer: George Lusty george.lusty@cma.gov.uk

Project directors: Jessica Radke jessica.radke@cma.gov.uk ; Deborah Wilkie deborah.wilkie@cma.gov.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.

Published 1 June 2012
Last updated 8 October 2021 + show all updates

  1. Undertakings from Groupon accepted.

  2. The CMA is consulting with a number of Groupon entities in relation to possible breaches of consumer protection law.

  3. Launch of investigation published.

  4. First published.

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