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Over the last year, the U.K. arm of Groupon (s:GRPN) has been the subject of a record number of complaints about the way it advertises deals to users, makes claims about products on sale and treats users.
Now the company has been told in no uncertain terms that it needs to stop and clean up its act.
After an investigation that was started in December by the Office of Fair Trading — Britain’s equivalent of the Federal Trade Commission — the site was told that it had breached consumer regulations on a wide range of occasions and given a three month deadline to fix its wrongdoing, or face legal action.
In a statement from the OFT on Friday, the organization said that “widespread” breaches and serious worries about the way it works.
“The investigation found widespread examples of Groupon’s practices which in the OFT’s view breached consumer protection regulations,” said the watchdog. “The OFT has specific concerns over practices involving reference pricing, advertising, refunds, unfair terms, and the diligence of its interactions with merchants.”
The list of requirements is broad, relating to a number of different areas where Groupon has been accused of misleading customers and partners:
Reference prices (adverts that compare an original reference price against a sale price), including savings, are accurate, honest and transparent. Groupon carries out an accurate, honest and realistic assessment of a merchant’s ability to provide goods or services in the quantity or time frame suggested. Products display clearly, prominently and on the same screen or before purchase all the limitations which apply to any deal. Groupon takes reasonable steps to ensure that health or beauty product claims are supported by adequate substantiation. Terms and conditions are fair. Groupon applies refunds policies and cancellation rights in accordance with the Distance Selling Regulations.
Groupon’s European operations were not originally built by the Chicago-based company, but purchased with the acquisition of MyCityDeal in 2010. The site was spun out of controversial Berlin incubator Rocket Internet two years earlier.
The company had previously said it would cooperate fully with the OFT investigation, and that it was “constantly evolving business process to ensure customers receive the best possible experience.”