LivingSocial provides undertaking to address ACCC concerns

19 December 2014

The Australian Competition and Consumer Commission has accepted a court enforceable undertaking from LivingSocial Pty Ltd (LivingSocial), an online group buying site as a result of ACCC concerns about a term in Living Social’s consumer contracts, and representations made on Living Social’s website.

In the ACCC’s view, during 2011 and 2012 LivingSocial engaged in misleading and deceptive conduct and made false or misleading representations on its website about consumers’ refund rights. In addition, the ACCC considers that from 2011 LivingSocial made false or misleading representations on its website about the price of certain deals.

Further, from at least January 2012 to November 2014, LivingSocial’s terms and conditions contained a term that permitted LivingSocial to make substantive changes to its terms and conditions without notifying its consumers or voucher purchasers. In the ACCC’s view, this was an unfair contract term.

Living Social has acknowledged that the representations may have contravened the Australian Consumer Law (ACL) and that the term in its consumer contacts was likely to have been an unfair contract term, as defined by the ACL.

“Businesses selling to consumers online have the same obligations under the Australian Consumer Law as all other businesses, and consumer guarantees, including refund rights, apply when consumers purchase online,” ACCC Chairman Rod Sims said.

“Online businesses must ensure that they do not mislead consumers about their consumer guarantee rights, and that the price and any restrictions on a deal being offered are clearly and accurately stated.”

In the undertaking accepted by the ACCC, LivingSocial has undertaken that it will:

  • not make false or misleading representations with respect to price, or rights, remedies or guarantees, including consumer guarantees under the ACL
  • give voucher purchasers refunds in all circumstances where they are entitled to a refund in accordance with LivingSocial’s terms and conditions and/or the consumer guarantee provisions of the ACL
  • display prices of deals inclusive of all mandatory additional fees except for delivery fees, the minimum charge for which will otherwise be specified if known at the time of publication
  • use only comparison pricing statements that are not misleading in representing the savings that could be achieved
  • send emails to all LivingSocial subscribers when substantive updates are made to its terms and conditions
  • send an email to all LivingSocial subscribers containing a corrective notice
  • develop and implement a compliance program.

Background

LivingSocial is an online group buying site which commenced operation in Australia in 2010. Prior to August 2012, LivingSocial also traded under the business name Jump On It.  Online group buying websites, often referred to as ‘daily deals’ or ‘deal of the day’ sites, sell vouchers for heavily discounted goods or services. Online group buying sites typically negotiate these deals with businesses and then market the deals to their members and the public by promotional emails, social media promotions and on their websites.

A significant number of complaints have been received by the ACCC and other ACL regulators since the online group buying industry emerged in Australia in 2010, and the ACCC and other ACL regulators have worked to improve practices in the industry.

This is the third matter pursued by the ACCC against an online group buying site operator. In December 2013 the Federal Court ordered Scoopon to pay total pecuniary penalties of $1 million for making false or misleading representations to both businesses and consumers. The ACCC also instituted proceedings this year against Spreets for misleading and deceptive conduct and making false or misleading representations. The Spreets matter is listed for a penalty hearing before the Federal Court in April 2015.

The LivingSocial Undertaking is on the Public Register.

Release number: 
MR 317/14
ACCC Infocentre: 

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