The UK’s consumer protection authority, the Office of Fair Trading (OFT), is investigating deal-of-the-day website Groupon for its persistent breaches of UK advertising regulations.
Groupon offers its members daily discounts on a range of deals from restaurant meals and theatre tickets to cosmetic treatment such as teeth whitening, hair removal and surgery. However the sales promoter has continually landed itself in hot water over its advertising practices and the UK’s advertising watchdog, the Advertising Standards Authority (ASA) has formally investigated and upheld complaints against the company 11 times this year and informally resolved another 37 cases.
Groupon most recently breached the Committee of Advertising Practice (CAP) Code for promoting cut-price cosmetic surgery. The ASA ruled (23 November 2011) that the promotion was likely to pressure consumers into making a rash decision to purchase physically invasive surgery and was therefore irresponsible (see our commentary here).
Due to the persistence of Groupon’s breaches and its apparent inability to adhere to the Code, the ASA has now said that it will refer any complaints it receives about its failure to conduct promotions fairly, failure to provide evidence that offers are available or its exaggeration of savings claims directly to the OFT. Referrals to the OFT are rare, however the ASA is able to make a reference to the OFT for investigation under the Consumer Protection from Unfair Trading Regulations 2008 if an advertiser persistently breaches the Code. It has since emerged that the OFT has been investigating Groupon’s trading practices since July 2011 amid concerns about its compliance with consumer protection legislation.
The OFT launched the investigation against Groupon confidentially and on its own initiative, but the latest move by the ASA lends weight to it. The ASA has also shown that it will not take persistent breaches by advertisers lightly and even though it may not have the weight of the law behind it, it is more than willing to escalate matters to the OFT as and when required.