ASA welcomes OFT announcement with Groupon to change some of its trading practices

The Office of Fair Trading (OFT) has today accepted undertakings from 'daily deals' company MyCityDeal Ltd, which trades as Groupon, to change some of its trading practices following an investigation.

The OFT has obtained undertakings from Groupon that it will change its practices to ensure that in the future: reference prices (prices against which a sale price is compared) including savings, are accurate, honest and transparent; Groupon carries out an accurate, honest and realistic assessment of a merchant’s ability to provide goods or services in the quantity or time frame suggested; and products display clearly, prominently and on the same screen or before purchase all the limitations which apply to any deal.

In addition to this, in the future Groupon must take reasonable steps to ensure that health or beauty product claims are supported by adequate substantiation; terms and conditions are fair; and that Groupon applies refunds policies and cancellation rights in accordance with the Distance Selling Regulations.

The OFT will now monitor Groupon over the next three months to ensure it implements the changes.

Cavendish Elithorn, senior director in the OFT's Goods and Consumer Group, said: “Collective buying and discount schemes can offer real benefits for both consumers and merchants. The market is growing rapidly, but it's 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.”

The ASA has said it welcomes this decision, after it referred Groupon to the OFT in December 2011 following repeated breaches of the Advertising Code.

The advertising standards body said it was particularly worried about the failure to conduct promotions fairly, such as not making clear significant terms and conditions; failure to provide evidence that offers were available, and exaggeration of savings claims.

During the three month monitoring period, the ASA has said that it will continue to refer to the OFT complaints it receives about Groupon that relate to matters subject to the undertakings.

Roy Blanga, UK Managing Director of Groupon, told The Drum: “As a young and innovative business, Groupon acknowledges that our processes and procedures have not always kept pace with our rapid growth. 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."