The daily discount website Scoopon has been ordered to pay penalties of $1 million for misleading customers and businesses.

In July the Australian Competition and Consumer Commission took action against the firm, which offers deals on products including holidays and accommodation, beauty treatments, gifts and entertainment.

The Federal Court imposed the fine after finding Scoopon contravened Australian Consumer Law by making false or misleading statements about refund rights and the price of goods advertised.

It also found businesses were misled because they were told there was no cost or risk involved in running a deal with Scoopon, when this was not the case, and that businesses were given the impression that 30 per cent of vouchers that would be sold would not be redeemed, when there was no reasonable basis for such a representation.

ACCC chairman Rod Sims says Scoopon has cooperated to resolve the matter.

“The ACCC understands that Scoopon has worked to improve its systems and processes which gave rise to this conduct to meet its obligations under the ACL,” he said.

Warning for online businesses

However, this penalty serves as a warning to other businesses in the industry to improve their practices or face action from the ACCC.

“Online competition and consumer issues are a priority for the ACCC.

“Online traders must understand their obligations are the same as traditional retailers and must not mislead customers or other businesses.”

In a statement, Scoopon says it did not intentionally mislead customers.

“As a pioneer of the Australian group buying sector and founding member of the Australian Group Buying Code of Conduct, our leading position has meant Scoopon is expected to uphold the highest standards in the industry,” it said.

“Although Scoopon did not intentionally set out to mislead consumers, the ACCC identified instances where we regretfully failed to meet our own, consumers’ and businesses’ high expectations.”

“Following discussions with the ACCC, Scoopon has voluntarily accepted orders which include additional measures to improve compliance.

“Building on measures we’ve already introduced, Scoopon is retraining our team members, has introduced additional compliance roles and offered to work further with the group buying industry to implement stricter compliance standards.”