Groupon in ASA trouble again
The news comes less that a week after the Office of Fair Trading revealed that it had launched an investigation into Groupon’s business practices and the ASA announced that it would be sending consumer complaints about the deals website directly to the OFT.
The first complaint was about an e-mail and website promotional offer from Ocado, where consumers were told they could get "One Year Midweek Delivery Pass Plus £40 Worth of Groceries for £39 from Ocado (£110 Value)". Four complainants, who saw the ads in July 2011 and did not believe the value of the midweek pass was £69.99, challenged whether they were misleading.
The ASA investigation found that a similar annual pass, based on prices advertised in July 2011, should have been £29.98, not £69.99. While at that time Ocado did offer an annual pass, it was for delivery on any day of the week, not just the midweek.
The ASA pointed out that while Ocado did launch an annual midweek pass at £69.99, it did not do so until August, after the Groupon promotion had run.
Ocado claimed that, because it did not have any price-fix guarantees, it had no legal or regulatory requirements to state that the price of the six-month pass was directly proportional to the annual pass, or that the prices of either passes should be fixed. It referred to its delivery pass terms and conditions which stated "Ocado reserves the right to change the membership fee for future renewals or memberships from time to time".
It claimed that, because the six-month midweek pass was a different product from the annual midweek promotional pass and was subject to change within six months, it was unreasonable for consumers to assume that the value of an annual midweek pass equated to the price of two six-month midweek passes.
Groupon agreed with Ocado's response.
The ASA rejected Ocado’s argument, and said that it had not substantiated the "value" of the promotional item and therefore the promotion was misleading.
The ASA said the ad must not appear again in its current form, and told Groupon to ensure statements of value were an accurate representation of the price at which the product was normally offered. It also told Groupon to make clear the manner in which price statements were calculated.
The second upheld complaint related to a promotion offering "Six Sessions of IBE Breast Enhancement for £99 at Beautopia Spa (£1200 value)".
Further text stated "Highlights, Microbeam energy technology, Designed to lift or enhance breasts, Discretion and confidentiality assured". Text headed "Fine Print" included "Typical growth between a 1/4 and 2 cup sizes within 5-8 weeks. Individual results may vary. 2-4 weeks between appointments".
A complainant challenged whether the claim "Typical growth between a 1/4 and 2 cup sizes within 5-8 weeks" was misleading and could be substantiated, as when she attended the spa she was told it would take a greater number of treatments to achieve more than ¼ cup size increase.
Groupon said that the figures given for typical growth were based on previous results attained by the spa. Groupon said that it believed the promotion made clear that results would vary depending on the client by using the word "typical" and stating that "individual results may vary".
It provided patient data obtained from the spa saying it showed the results of IBE Breast Enhancement on six patients. These recorded a range in growth of between one-quarter and one cup size after between five and six treatments, and were signed by the patient and a spa employee.
The ASA ruled that the use of the word "typical" when referring to growth of between “1/4 and 2 cup sizes within 5-8 weeks” would be interpreted to mean that the majority of women would achieve this result. The ASA also pointed out that the spa did not have robust enough evidence to back its claims for “typical” results.
The ASA concluded that the promotion was misleading and must not appear again in its current form.