Discount electronics manufacturer Kogan Technologies has promised to modify its advertising practices after the ACCC gave it a stern warning.
In a promotion on its Web site last year, Kogan advertised a 100Hz 42 inch LCD TV at $1499, saying this represented a saving of $1500.
The comparison was not based on a previous price offered by Kogan, however, but on the price of similar TVs from other retailers. The TV model in question had only ever been sold for $1499.
Such non-identical value comparisons are a no-no in the ACCC's books if the basis is not clearly disclosed, as are claims of discounted prices if products have never been sold at the higher price.
In a similar advertisement in the Herald Sun on November 25, Kogan also listed a series of TVs, digital photo frames and cameras, with claimed percentage savings of between 33% and 45%. However, the listed prices were the only prices the goods at which had ever been offered.
As well as objecting to those promotions, the ACCC also argued that straightforward price comparisons would not necessarily reflect other features such as warranty terms and company reputations.
"It is potentially misleading to compare the prices of goods based on the estimated price a consumer might pay for a product with the same specifications from another manufacturer," it noted in legal documents. "This is particularly the case where the products are not exactly the same, as such comparisons do not take into account other value-adding features."
"Retailers must make sure these comparisons are accurate so consumers can make an informed choice," ACCC chair Graeme Samuel said in a statement announcing its investigation into Kogan, which concluded on Monday with a voluntary legally enforceable undertaking from the company.
Kogan has agreed to modify its site and not run similar comparison-based ads in the future without including all relevant details, while company founder and director Ruslan Kogan must undergo annual formal training on compliance with trade practices laws.
APC sought comment from Ruslan Kogan, who said he would need to check with his lawyers before discussing the situation.
Kogan, which originally operated exclusive via eBay sales and now relies largely on retailing online to offer mass-market electronics at low prices, is no stranger to cheeky campaigns. In February, the company undertook to lower prices on most of its products, and it has also launched a 'Kevin37' TV specifically priced to match the Rudd government's $900 stimulus payment.