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BizReport : Law & Regulation : December 05, 2011

UK trading authority to investigate Groupon deals

Reports in the UK press show that Groupon is fighting yet another battle. This time the daily deals company has been referred to the Office of Fair Trading by the Advertising Standards Authority after repeated breaches caused much concern.

by Helen Leggatt

Groupon was referred to the Office of Fair Trading (OFT) by the Advertising Standards Authority (ASA) over three specific allegations: "failure to conduct promotions fairly, such as not making clear significant terms and conditions"; "failure to provide evidence that offers are available"; and "exaggeration of savings claims".

According to the ASA, "We are taking this approach because, given Groupon's track record, we have serious concerns about its ability to adhere to the Advertising Code. It is in the public interest that we refer the matter to the OFT, the OFT being better placed to address any underlying issues concerning Groupon's trading practices generally."

The ASA has identified at least 48 misleading offers promoted by the website in just under a year. Not all complaints are from consumers. Many businesses have expressed regret about their dealings with Groupon.

Earlier this year a survey by UK-based copywriting boutique Cooper Murphy revealed that almost half (49%) of merchants won't run a second Groupon deals campaign, despite nearly two-thirds having made a profit. Why? Because, said 78% of merchants, people who flock to the group buying site are more 'stingy' than regular customers and repeat business is 'unsatisfactory' (82%).

Groupon responded to the recent allegations by stating in an email, "We are constantly evolving our business process to ensure customers receive the best possible experience at the highest standards. We are cooperating fully with the OFT to ensure that the rights of consumers are protected."

Tags: advertising, daily deals, Groupon, UK

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