The CMA has written to Groupon to ask to make changes to its business practices to ensure that it is complying with consumer protection law.

The CMA launched an enforcement investigation into Groupon UK in April 2021.  Readers will be aware that Groupon is an e-commerce marketplace that offers discounts and deals for a range of products and services.

Following its investigation, the CMA says that it has found evidence that Groupon does not always provide customers with the refunds and other forms of redress, such as replacement items, to which the CMA considers they are legally entitled. In cases where customers have not been provided with the goods or services that they paid for, they are sometimes only offered Groupon credits instead of refunds. Many people will have experienced similar issues over the past 18 months in relation to holidays and flights that have been cancelled.

The CMA is also concerned that Groupon is failing to ensure that:

purchased vouchers can always be redeemed within the advertised periods;

descriptions of goods and services are accurate;

products are in stock and delivered within the advertised timeframes;

items are of a satisfactory quality; and

customer service is satisfactory when customers contact them about problems.

As well as potentially breaking consumer protection law, Groupon could be in further hot water as they have failed to improve their business practices since the CMA’s predecessor, the OFT, investigated them in 2012. The CMA has highlighted that Groupon could be in breach of the undertakings that it provided to the OFT in 2012 before the CMA took over the OFT’s functions. The original undertakings were to change its practices to ensure that in the future:

Reference prices (adverts that compare an original reference price against a sale price), including savings, were accurate, honest and transparent.

Groupon carried out an accurate, honest and realistic assessment of a merchant's ability to provide goods or services in the quantity or time frame suggested.

Products displayed clearly, prominently and on the same screen or before purchase all the limitations which applied to any deal.

Groupon took reasonable steps to ensure that health or beauty product claims were supported by adequate substantiation.

Terms and conditions were fair.

Groupon applied refunds policies and cancellation rights in accordance with distance selling legislation.

The next stage of the process is for Groupon to respond to the concerns outlined by the CMA.  The CMA says that Groupon may avoid court action by signing further undertakings to address the CMA’s concerns. This may include redress for consumers who were denied a refund and additional compliance monitoring. Given the relative inaction by Groupon over the previous 9 years, the question arises as to whether the CMA has sufficient penal powers – undertakings only go so far to provoke a change in business practice.