The Office of Fair Trading has confirmed that it has been investigating Groupon's business practices since July 2011.

The confirmation follows the release of a statement by the Advertising Standards Authority saying that complaints it receives from consumers will now be referred directly to the OFT.

The ASA's statement says that it is taking the unusual step because "given Groupon’s track record, we have serious concerns about its ability to adhere to the Advertising Code. It is in the public interest that we refer the matter to the OFT, the OFT being better placed to address any underlying issues concerning Groupon's trading practices generally."

The ASA says that MyCityDeal Ltd, which trades as Groupon, has been found guilty of "repeated breaches of the Advertising Code [the CAP Code]."

In particular, the ASA will be passing over complaints about Groupon:

• Failing to conduct promotions fairly, such as not making clear significant terms and conditions;
• Failing to provide evidence that offers are available;
• Exaggerating savings claims.

So far during 2011, the ASA has formally investigated and upheld complaints against Groupon’s advertising on 11 occasions. It has also informally resolved 37 cases. The ASA statement says: "We will continue working closely with the OFT on these issues to ensure consumers are protected."

The OFT has made it clear that the current investigation only involves Groupon. It is not currently investigating any other deal sites, a number of which have had complaints upheld against them by the ASA on similar grounds.

Even though the investigation is restricted to Groupon, some marketing experts suggest it has much wider implications. One says: "You have to ask yourself whether the Groupon-style business model can be made compatible with the UK's self regulatory system for advertising and marketing."