Kogan Australia, the parent of online electronics retailer Dick Smith, has received a warning from the New Zealand Commerce Commission for potentially misleading customers about its online membership subscription.
The regulator launched an investigation after consumers complained they were unknowingly given a 14-day free trial of the ‘First’ membership. The trial led to a payment obligation to pay $149 annually or $14.99 monthly once it ended.
Most of the complainants did not realise they had signed up for the trial until they received a $149 charge.
“The pre-selection of the “First” membership was not obvious on Dick Smith’s website, which meant it was unclear to consumers that they were signing up to a subscription,” explained Vanessa Horne, Commerce Commission Competition, fair trading, and credit GM.
“To avoid automatically subscribing, a customer would have to first recognise the tick box had been selected, which meant they were signed up, and then actively de-select the option,” she added.
The company used the pre-selected tick box to add a First trial to all eligible consumers’ shopping carts from July 3 to September 19 last year.
After the commission raised the issue, Dick Smith stopped using pre-selected fields and now uses a sign-up method that requires consumers to actively sign-up.
“The commission is encouraging consumers to keep a look out for sneaky subscriptions when shopping online. As we head into the holiday shopping season, it’s important to take a moment to check exactly what’s in your cart before purchasing,” added Horne.
In a statement sent to Inside Retail, Kogan said it does not accept the views outlined by the Commerce Commission, but remains committed to ongoing improvement to the shopping experience.
The “customer experience in question” had been changed before the Commission’s findings, and the First program has proven hugely popular since launching in July last year, the company continued.
“We are continually evolving our digital storefront, regularly testing different designs and making improvements based on data and customer feedback. As always, any changes we make are customer-focused to improve the shopping experience and deliver value to our customers,” it added.
