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The Commerce Commission has stemmed a growing tide of complaints about daily deal and group buying websites with a proactive approach to educating the websites about consumer law.
Greg Allan, Manager Competition Branch, says the Commission was on the case as soon as it started to see concerning trends emerging in the daily deal and group buying market place.
“Earlier last year, our intelligence unit identified this as an area where we were increasingly likely to see complaints. We then started to see numbers of complaints reported to the Commission begin to climb. As a result, we’ve been targeting the websites, talking to them about their compliance programmes, checking how they vet advertising, and how they deal with complaints,” said Mr Allan.
Under the Fair Trading Act, it is illegal for any business whether they are operating in the real or virtual world, to mislead consumers, give false information, or use unfair trading practices.
While issues continue to emerge, Mr Allan said the levels of complaints to the Commission have been steadily dropping since it we began talking to the websites about these issues.
“We have been particularly heartened to see a number of these websites taking responsibility, including by issuing refunds to customers whose deals haven’t gone according to plan,” said Mr Allan.
Mr Allan said it was particularly important as the market evolved that the Commission’s focus remained on the websites rather than the individual traders as the websites are in a better position to obtain compliance before offers are published.
“These deals are now targeting consumers in real time. You could be walking down the street and want a meal, and look to your smart phone to find out which deals are nearby. You can buy on the spot, download the barcode, walk into a restaurant and get the deal.”
“The fast-changing nature of these deals means we have to be ahead of the game, rather than picking up the pieces at the end, which is why we’ve taken a proactive approach,” Mr Allan said.
“Consumers also need to know their rights and do their homework. Anyone looking to take up a deal should carefully check the offer, including the terms and conditions, and if unsure of any part of the offer, contact the supplier making the offer to confirm details ” said Mr Allan.
Daily deal websites offer goods or services at a discounted price until the pre-specified number of sales is reached or the day ends (whichever comes first).
Group buying websites offer products or services at significantly reduced prices on the condition that a minimum number of buyers buy. This means a certain number of people must sign up for the offer before it becomes available.
Numbers and types of complaints
Between 1 January and 30 June 2011, when the numbers of daily deal websites rose dramatically, the Commission received an average of 22.5 complaints per month. By October and November 2011, the average was 10 complaints per month from 85 websites.
The type of complaint has also changed over that period. Initial complaints focused on traders not supplying goods or services promised, or imposing extra conditions which meant that vouchers could not be redeemed. Recent complaints have focused more on misleading advertising statements and misleading recommended retail prices.