Kogan could face court over allegations it increased the price of more than 600 products before offering a 10 per cent discount on them.
The Australian Competition and Consumer Commission (ACCC) has filed a proceeding in the Federal Court of Australia alleging the ASX-listed online retailer made false or misleading representations about the discount promotion.
According to the ACCC, in most cases Kogan had allegedly already increased the price of the products by at least 10 per cent.
The sale took place between 27 and 30 June 2018 when Kogan ran an online promotion telling consumers they could obtain a 10 per cent discount on most of its products ahead of the financial year's close.
“We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual prices. In fact, Kogan had inflated product prices which we say created a false impression of the effective discount,” ACCC commissioner Sarah Court said.
Kogan also sent out emails with statements such as “48 hours left!” and “Ends midnight tonight!” which the ACCC alleged gave the impression that consumers only had a limited time to purchase at the “discounted” prices.
“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings,” Court said.
Kogan said in a statement that it strongly denies the allegations and will defend the proceedings. The company said it cooperated fully with the ACCC throughout its investigation and is disappointed that the consumer watchdog has nevertheless decided to issue proceedings against Kogan.com.
"Kogan.com did not gain any material financial benefit as a result of the promotion. Kogan.com does not expect any adverse change to its ongoing promotional activities as a result of this matter," the company said.
In the Concise Statement – which lists all products and the prices before, during and after the promotions – lodged with the Federal Court, the ACCC stated that Kogan's conduct eroded any real discount the promotion seemingly offered.
As a result of Kogan's practise, consumers were or were likely to have been misled about the value of the purported discount offered. The conduct is likely to have enticed consumers to purchase products through the website during the Tax Time Promotion.
"The harm that was or was likely to have been suffered by consumers includes the loss, or serious distortion, of genuine consumer choice. Kogan's conduct may also have unfairly disadvantaged its competitors," the ACCC added.
The watchdog is seeking penalties, injunctions, declarations, corrective notices and costs from Kogan.
Story updated at 12:32pm on 23 May to include Kogan's statement.