Member Article

Groupon to be investigated for advertising breaches

Daily offer company Groupon have been referred to government watchdog, the Office of Fair Trading, after it broke advertising laws on a number of occasions through 2011.

The Advertising Standards Authority (ASA) has referred the company, which will now be begin to investigate its practices.

It follows a number of incidences of Groupon breaching UK advertising regulations over the last 11 months.

A statement from the ASA said that following repeated breaches of the Advertising Code by MyCityDeal Ltd, trading as Groupon, the organisation would be referring complaints about Groupon ads specifically relating to:

“Failure to conduct promotions fairly, such as not making clear significant terms and conditions; failure to provide evidence that offers are available, and exaggeration of savings claims.”

The statement said the ASA has “serious concerns” about its ability to play by the rules, and was acting in the public interest by involving the OFT.

A similar statement from the OFT said: “This investigation is ongoing and the OFT will not be in a position to determine whether it considers the law has been infringed until it has completed its investigations and assessed the available evidence.”

Groupon uses discounts and offers to attract new customers to businesses with consumer products and services.

The company has seen huge growth in the last year following the introduction of its travel business, Groupon Getaways among other features, and recently it was valued at £8.1bn.

Typically the company will retain roughly 40% of the income generated by the deals.

Groupon did not respond to Bdaily enquiries about the investigation.

This was posted in Bdaily's Members' News section by Tom Keighley .