Group buying: Two things to watch out for

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Group buying: Two things to watch out for

News that the ACCC is taking court action against Scoopon is important if you've ever considered doing business with a group buying site.

The Australian Competition and Consumer Commission (ACCC) is taking court action against group buying site Scoopon, alleging misleading and deceptive conduct.

If you run a small business, look closely at the ACCC's allegations that Scoopon told businesses there was no cost or risk involved in running a Scoopon deal, and that between 20 and 30% of vouchers would not be redeemed.
 
The problem was that Scoopon charged businesses to participate, and it had "no reasonable basis" for the estimate of redemption rates, according to ACCC officials.
 
"Businesses must have reasonable grounds when making representations to consumers and to other businesses," said ACCC chairman Rod Sims.
 
So there are two lessons to be learned:
 
  1. Make sure you can justify any claim you make to customers, whether they are consumers or other businesses; and
  2. Make sure that your suppliers deliver on any claims they make, and be prepared to raise any significant discrepancies with the ACCC.
 
An order to repay all fees collected from Scoopon's business customers during the period that the misrepresentations were being made would seem appropriate to us.
 
But ACCC officials said the Commission is seeking "declarations, injunctions, community service orders, pecuniary penalties and costs."
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