The UK arm of Online deals website Groupon has been given three months to improve its business practices after an investigation by the Office of Fair Trading found it has breached advertising codes more than 50 times in a year.
The investigation uncovered widespread examples of rule-breaking, including malpractice involving reference pricing, advertising, refunds and interactions with merchants.
Groupon accepted it had problems and said it had strengthened its customer services team.
The watchdog acted after receiving complaints from customers and said it had discovered “widespread” examples of Groupon breaching consumer protection regulations.
The Advertising Standards Authority also referred the company to the OFT after Groupon was found to have breached advertising codes more than 50 times in a year.
Cavendish Elithorn, a senior director in the OFT’s goods and consumer group, said:”Collective buying and discount schemes can offer real benefits for both consumers and merchants. The market is growing rapidly, but it’s important that consumers benefit from consumer protection law as well as from the discounted offers. Groupon has cooperated fully with our investigation and is making changes to its business practices to address our concerns.We will be monitoring the situation closely to ensure that consumers benefit from these improvements.”
Groupon, which launched on the stock exchange in the US last year, said it had worked closely with the OFT to identify areas of weakness and would willingly implement the recommended changes.
UK managing director Roy Blanga said: “As a young and innovative business, Groupon acknowledges that our processes and procedures have not always kept pace with our rapid growth.We have independently made many improvements since early 2011 and have worked transparently and constructively with the OFT to identify areas that require further changes.”