Business

iPhone offer by Groupola 'misleading', says OFT

iPhone
Image caption The iPhone offer was used to try to attract consumers to the website

A group buying website has been censured after promoting a cut-price iPhone sale when it only had eight handsets available.

Nearly 15,000 people registered with Groupola for the "misleading" sale, shortly after the iPhone 4 launch, the Office of Fair Trading (OFT) said.

But they were not told that only eight phones were on sale at the discount price of £99.

Groupola apologised and said those responsible no longer worked there.

The OFT ordered the company not to repeat such "bait pricing".

Promotion

Groupola is run by a company called Markco Media, which was founded by Mark Pearson - who recently appeared on Channel 4's Secret Millionaire show.

The group buying website is one of many that feature special offers that are only activated when a bulk of members sign up to the deal.

In a bid to entice people to register, Groupola promoted the sale of iPhone 4s for £99, although the normal retail price at the time was £499.

However, as only eight handsets were available, most people were left disappointed, but the business consequently had thousands more people's details available to it when sending out daily e-mail alerts.

During the promotion, a sale progress bar at one point indicated that more than half of the iPhones were still available.

The OFT said one of the firm's employees also went on social networking website Facebook to make positive comments about the business - suggesting he was an ordinary consumer.

"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," said Heather Clayton, of the OFT.

Censured

Following an investigation, Markco Media agreed to never promote offers in which the number of products available was disproportionate to the scale of advertising and marketing.

Any employees, or people who have a relationship with the company, must also "clearly and prominently" disclose their interest when on social networking and blogging websites.

But the OFT did not order the company to contact the 15,000 people who signed up to explain that they had potentially been misled.

Mr Pearson, Groupola chairman, said: "We would of course like to apologise to anyone who was disappointed with the promotion that we ran in July 2010.

"We worked closely with the Office of Fair Trading during their enquiries to ensure that nothing like this happens again. When the issue first arose, nearly nine months ago, we immediately carried out our own internal investigation as to the cause of the problems and the members of the team responsible for the promotion are no longer with the company."

Bait pricing was recently highlighted by the OFT as one of the practices that had the greatest potential to cause harm to consumers.

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