The consumer watchdog is taking major online coupon business Scoopon to court accusing it of misleading and deceptive conduct.
The move is the first in a targeted campaign by the Australian Competition and Consumer Commission (ACCC) against the rapidly growing group-buying industry.
The ACCC accuses Scoopon of misleading both consumers and businesses through its daily deal site that sells vouchers for heavily discounted goods or services.
Scoopon says it will work with the regulator to resolve the issue.
The popularity of daily deal sites in Australia has exploded since 2010 and Scoopon, which is part-owned by a group of investors including James Packer, is the biggest.
But that growth has been matched by a significant number of complaints to the ACCC and other consumer law regulators, the watchdog says.
Scoopon allegedly misled consumers over their ability to redeem vouchers, refund rights, and the price of goods advertised in relation to some deals.
Businesses worried they would end up financially worse off due to the coupons also were falsely told there was no cost or risk involved in running a deal with Scoopon, when a fee was payable, the ACCC alleges.
For example, businesses were told 20 per cent and 30 per cent of vouchers would not be redeemed when there was no reasonable basis for this representation, it says.
Scoopon said in response that it had improved its processes for selecting deals since it began operating
“We will review the ACCC allegations made and work to resolve the issues raised,” it said in a statement.
ACCC chairman Rod Sims says the watchdog has made online competition and consumer issues a compliance and enforcement priority.
“Ensuring that the digital revolution delivers competition benefits to consumers and small businesses is a focus for the ACCC,” Mr Sims said in a statement on Friday.
The sites negotiate deals with businesses and market them to their members and the public.
Scoopon is part of the Catch of the Day group of sites started by brothers Hezi and Gabby Leibovich.
Hezi was in seventh place in BRW magazine’s young rich list last year with an estimated wealth of $155 million.
The ACCC is seeking penalties and other actions, and the matter is due to begin in Brisbane’s Federal Court on July 25.
