Groupon gets three months to comply with consumer protection laws

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Daily deals website Groupon has been given three months to make changes to the way it does business following an investigation by the Office of Fair Trading.

MyCityDeal Ltd, which trades as Groupon, has signed undertakings that it will change its trading practices to comply with consumer protection regulations.

That includes making sure that adverts that compare an original, reference, price against a sale price are accurate and transparent, making a realistic assessment as to whether a merchant will be able to provide the goods or services on offer, and showing all conditions that limit the deal before the offer is bought.

Terms and conditions must be fair, and refunds and cancellations policies must meet the requirements of Distance Selling Regulations. Groupon must also take “reasonable steps to ensure that health or beauty product claims are supported by adequate substantiation.”

Cavendish Elithorn, 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.”

The OFT says its investigation, launched in July 2011 in response to consumer complaints, found “widespread examples” of Groupon practices that “in the OFT’s view breached consumer protection regulations.” Groupon was also referred to the OFT by the Advertising Standards Authority in December 2011 after it found multiple breaches of the UK advertising codes.

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