Watchdog raps Groupola over iPhone promotion

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The Independent Online

A group buying website has been censured after heavily promoting a sale of cheap Apple iPhones when it only had eight handsets available.

Almost 15,000 people registered with Groupola for the sale of £99 iPhone 4s, which have a normal retail price of £499, the Office of Fair Trading (OFT) said.



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



Groupola has apologised and said those responsible no longer worked for the website.



The website features special offers that are activated when a number of members sign up to the deal.



It 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 OFT's investigation found Markco Media used "bait pricing" to promote the sale in order to entice consumers to join the website.



The extensive promotion of the sale included a press release, a national newspaper interview and marketing on Facebook and Twitter.



A sale progress bar at one point indicated more than half of the iPhones were still available below a caption stating "202 bought".



The OFT said it was also concerned about misleading comments made by one Groupola employee on the company's Facebook page at the time of the sale, who represented himself as an ordinary consumer and made positive comments about the company.



As a result of the investigation, Markco Media has agreed not to promote offers when there is an inadequate supply of products compared with the scale of advertising and marketing.



It has also promised not to make statements without clearly and prominently disclosing when the writer is an employee or has another relevant relationship with the company.



OFT spokeswoman Heather Clayton said: "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."



Groupola chairman Mark Pearson 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."

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