The Office of Fair Trading this week concluded a lengthy investigation, which began in July 2011, into the fast-growing brand who have come under fire from customers and consumer groups for offering services that don’t always materialise – and have insisted that Groupon ‘change some of its trading practices’.
Groupon offers cheap deals on services like day spas, beauty products, holidays, restaurant meals and events on the condition that customers are buying as part of a group.
It promises businesses a big chunk of customers in exchange for heavily discounted services. Many businesses participating in the deals are encouraged to cut the price right back to cost in the anticipation that customers will return in future and pay full price.
The Office of Fair Trading said “The investigation found widespread examples of Groupon’s practices which in the OFT’s view breached consumer protection regulations,”
“The OFT has specific concerns over practices involving reference pricing, advertising, refunds, unfair terms, and the diligence of its interactions with merchants.”
The Advertising Standards Agency has also invstigated and resolved 37 Groupon cases and upheld complaints on 13 of the company’s ads.
OFT’s senior goods and consumer group director Cavendish Elithorn 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.”
Groupon trades as officially as MyCityDeal with head offices in Chicago (pictured).
