Groupon, the online discounter, has been ordered by the UK’s competition watchdog to improve the way it treats its customers or face legal action.
The Competition and Markets Authority said it has evidence that Groupon does not always provide customers with refunds or replacement items.
In some cases, shoppers are offered Groupon “credits” instead of the goods and services they paid for.
Groupon said it continues to “cooperate fully with the CMA”.
The watchdog said Groupon must make “swift” changes to how it deals with customers to “ensure that it is complying with consumer protection law”.
A spokeswoman for Groupon said: “We take the outcome of the investigation very seriously and will be carefully reviewing the CMA’s findings.”
The CMA launched a new investigation into the coupon platform in April and found instances there the company was “potentially breaking consumer protection law”.
It said: “The CMA has found evidence that Groupon does not always provide customers with the refunds and other forms of redress, such as replacement items, to which the CMA considers they are legally entitled.
“In cases where customers have not been provided with the goods or services that they paid for, they are sometimes only offered Groupon credits instead of refunds.”
The CMA is also concerned that Groupon is failing to:
Ensure purchased vouchers can always be redeemed within the advertised periods
Verify the accuracy of descriptions of goods and services
Ensure that advertised products are actually in stock and delivered within the advertised timeframes
Check that goods and services are of a satisfactory quality
Conduct quality assurance on its customer service
Groupon UK website
“More people than ever are shopping online, especially over the last year, ” said the CMA’s chief executive Andrea Coscelli. “It is therefore essential that online businesses treat customers fairly and refund them money where due under consumer law.
“Groupon must swiftly step up and do right by its customers if it wants to avoid court action.”
The watchdog also said Groupon could be in breach of formal commitments it had made to the CMA’s predecessor, the Office of Fair Trading, in 2012.
Groupon had pledged to ensure information on its website were not misleading and to comply with customers’ legal cancellation and refund rights.
The watchdog said it had written to the firm, as well as other connected businesses it felt may have breached consumer law, including Groupon Goods Global GmbH – registered in Switzerland – and Groupon Inc in the US.