CMA threatens Groupon with court action over consumer practices

What are some of the key areas which the CMA focuses on in online marketplaces when assessing compliance with consumer protection regulation?

The question

What are some of the key areas which the CMA focuses on in online marketplaces when assessing compliance with consumer protection regulation?

The key takeaway

Keep an eye on redemption periods for vouchers and the practicalities of meeting the advertised timings. Watch out also for the accuracy of advertised product or service claims. Finally, take great care with your legal commitments around consumer rights and beware the temptation of offering credits instead of refunds. 

The background

The CMA launched an enforcement investigation into Groupon UK in April 2021 regarding suspected breaches of consumer Law. Groupon had given undertakings in 2012 to change its practices but the CMA became concerned about whether these undertakings were still being complied with. 

In 2012 Groupon UK gave undertakings to the CMA’s predecessor, the Office of Fair Trading (OFT), to change certain practices that were unfair or misleading to customers. However, the CMA became concerned whether those undertakings were being complied with. Under the April 2021 investigation it is looking into whether Groupon UK is:

• providing refunds to consumers in accordance with consumer protection laws, and
• ensuring that descriptions of items or services on its website are accurate and that products are delivered within the advertised timeframes.

The CMA sought information from Groupon UK to assess whether their business practices breach consumer laws and subsequently assess whether further action is required. In August 2021, the CMA wrote to Groupon outlining its specific concerns resulting from the investigation. 

The development

The CMA found evidence that Groupon does not always provide customers with refunds or other forms of redress to which the CMA considers consumers are legally entitled to. In many cases customers were provided with Groupon credits instead of refunds.

The CMA also raised concerns that Groupon fails to ensure that i) consumers can redeem purchased vouchers within the advertised periods; ii) description of goods and service are accurate; iii) products are in stock and delivered within the advertised timeframes; iv) items are of satisfactory quality; and v) customer service is satisfactory when contacting Groupon about problems.

The CMA has given Groupon an opportunity to respond and make further undertakings.

Why is this important?

The CMA actively seeks to ensure compliance with consumer protection regulation and will ensure that breaches are taken seriously. This includes the threat of court action where necessary.

Any practical tips?

Online marketplaces inevitably advertise a whole range of different products and services, which can throw up challenges with consumer protection compliance. Ensuring the teams on the ground know how to describe the offers accurately, and how to deal fairly with disgruntled customers, is a key part of any internal compliance programme.