A watchdog has taken enforcement action against a group buying site for heavily promoting a sale of Apple's iPhone 4s when it only had eight handsets available.
The Office of Fair Trading's investigation found Markco Media used 'bait pricing' to promote a sale of iPhone 4s at £99 (normal retail price was £499) to entice consumers to join its Groupola group buying site and sign up to receive daily email alerts from the company (see the Cheap iPhones guide).
Following extensive promotion of the iPhone sale, including via a press release, a national newspaper interview and marketing on Facebook and Twitter, almost 15,000 people signed-up and registered with Groupola for the sale.
The sale took place shortly after the much anticipated launch of the iPhone 4 last summer. People were not informed there were only eight handsets available and so almost everybody attempting to buy an iPhone 4 at £99 was left disappointed.
Groupola's marketing said at the time: "The UK's leading daily city deal website is offering discount hunters £400 off SIM-free iPhone 4 handsets."
MoneySavingExpert.com regularly publicises the top group buying deals but only after we have confirmed stock levels are adequate.
Groupola asked us to publicise this deal but as it wouldn't confirm stock levels we did not.
During the promotion, a sale progress bar at one point indicated over half of the iPhone 4s were still available and above this was a caption stating '202 bought'.
The OFT also came down heavily on Groupola after an employee pretended to be a customer and talked up the offer on the company's Facebook page.
The company and its director have signed undertakings that prevent them from:
- offering sale products where there is a disproportionately inadequate supply compared with the scale of advertising and marketing.
- making statements (including comments on social networking and blogging sites) without disclosing when the author is an employee.
Bait pricing is when there is only a small proportion of stock available at the advertised offer price.
Heather Clayton, from the OFT, says: "Competitive markets, and economic growth, need fair and transparent promotional activity with consumers able to shop around and trust advertising of prices. This case demonstrates that, where necessary, we will take enforcement action.
"It is never acceptable for traders to pretend to be independent consumers. It is increasingly the case that people make purchasing decisions based on online peer recommendations and the OFT will continue to prioritise cases that protect the integrity of online consumer reviews and comments."
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