Groupon to be investigated by Office of Fair Trading

Email coupon company Groupon is being investigated by the Office of Fair Trading (OFT) for breaching UK advertising laws almost 50 times in the last year alone.

It has been revealed that the deals firm has been under investigation since July, to check if it was "complying with consumer protection legislation, including in relation to certain of its advertising practices". The evidence-gathering is still ongoing, with the OFT keen to continue it until completion before officially determining whether Groupon is guilty of breaking regulation.

The case was referred to the OFT by the Advertising Standards Agency (ASA), the first time the organisation has made a referral since 2008 when it referred RyanAir for its repeated breaches. Now it believes that Groupon is guilty of some 48 offences in the last 11 months.

The coupon firm was recently slapped down by the ASA for sending out an advert that rushed people into a decision to get breast implants, by giving them a limited time frame to snatch up the money off deal. This incident comprises several of the cited reasons for the investigation, which include: "failure to conduct promotions fairly”, "failure to provide evidence that offers are available,” and "exaggeration of savings claims".

"We are taking this approach because, given Groupon's track record, we have serious concerns about its ability to adhere to the advertising code," said the ASA.

The Guardian has reports from smaller businesses and their interaction with Groupon, with owner of Berkshire cake maker 'Need a Cake', Rachel Brown, describing the experience as her “worst ever business decision.”

Initially hoping to attract some new customers by offering 12 cupcakes for a quarter of the price, it all went south when Groupon put no limit on the number of people who could make an order.

This left Need a Cake with over 8,500 requests to fulfil – a little more than its usual 100 a month. The small company was then forced to bring in agency staff to finish up all the orders, wiping out profits for the year.