Need to know
- Online retailer Kogan appears to be making refunds harder than they should be
- Our case study was refused his money back, in contravention of consumer law
- A Kogan whistleblower says such conduct is standard procedure
When Clive Ferguson got in touch with the Aussie online retailer Kogan after his recently purchased Kogan D500 Notebook experienced a major failure, he wasn't expecting a tiresome corporate-style runaround. But that's what he got.
Clive had bought the notebook to display sheet music for his weekly choir practice, but the screen became unreadable after a few weeks.
After searching unsuccessfully for a phone number or business address on Kogan's website so he could mail the computer back, Clive got in touch with Kogan's "customer care" team, which asked him to provide an invoice and then download an updated driver.
Clive's Kogan notebook stopped working shortly after he bought it.
"After analysing the video they further requested photographs of both sides of the case, the keyboard and screen.
"Eventually, they emailed me an address sticker enabling me to mail it to them. They let me know when they received it and said it would be around two weeks before anyone could look at it."
About two weeks later Kogan got back to Clive, saying the problem couldn't be fixed and that they didn't have another D500 in stock.
"So they offered me a choice of one of two cheaper notebooks from their range," Clive says.
"I declined. They then offered me a credit equal to the money I paid for the D500. I responded that according to Australian Consumer Law (ACL) I was entitled to a full refund of my money."
An unreadable screen would count as a major fault, which gives customers the right to demand a refund
Clive was correct on that point, since the Kogan D500 didn't meet the acceptable quality provision of the ACL and an unreadable screen would count as a major fault, which gives customers the right to demand a refund.
But Kogan countered that the terms and conditions of its product warranty meant that no refund would be forthcoming, and told him he had six months to redeem his credit.
For the record, the ACL actually supersedes all product warranties, whether the product was bought in Australia or from overseas.
Kogan seems to have a knack for generating customer complaints.
CHOICE Help, our mediation service for CHOICE members, has lodged 22 cases involving Kogan since 2016 (which is on the high side for a single business).
Many of these cases involved faulty products and Kogan's apparent avoidance of its ACL obligations regarding returns, repairs and refunds.
In the first 11 months of 2018, 344 complaints [about Kogan] were lodged in NSW alone
And Kogan has been near the top (or at the top) of the NSW Fair Trading Complaints Register list in every 2018 monthly report. In the first 11 months of 2018, 344 complaints were lodged in NSW alone.
In November last year, another consumer contacted CHOICE with a Kogan issue that also came up in the CHOICE Help cases.
"I purchased a big screen TV from Kogan which became faulty after a few months and the original box has been thrown out," the customer says.
"They offered a courier to pick the TV up, but asked me to provide the packaging myself."
The customer had thrown out the box, but the ACL stipulates that bulky products such as TVs don't have to be returned in their original packaging, and packing a TV without it would be a tall order for most consumers.
As for Clive Ferguson, he finally got his refund for the faulty Kogan D500 Notebook, but only after a lengthy ordeal involving numerous emails in which he mentioned that he'd brought the matter to the attention of CHOICE and would be contacting fair trading agencies as well.
Kogan responded to Clive's complaint about the issue on 5 October 2018. The refund wasn't approved until 19 November.
It's not like Kogan can't afford to do better by its customers and the ACL.
The company states in its 2018 annual report that it doubled its earnings for the third year in a row and has 1,338,000 active customers.
The 2018 report shows revenue of $412,312,395 and a net profit of $14,110,993 – up from $3,739,865 in 2017.
The company has also expanded its reach into insurance, financial services and internet services.
Our case studies are well in line with the experiences of a former Kogan employee (technically a contractor), who shared his story with CHOICE.
According to Neil (not his real name), who worked for Kogan as a repair technician until late last year, it's standard procedure to force customers to jump through hoops if they have a problem with a purchase.
"Getting a refund from Kogan is an arduous process," Neil says.
"First the contact customer staff will try to get customers to return goods to the manufacturer. If that doesn't work, an offer for a voucher will usually come next, then for a larger voucher.
"If you're lucky, you'll finally get a return organised, which is just the beginning of a longer journey.
I was not proud to work for this company
"I've seen goods that went back and forth between Kogan and the customer three or more times, and the customer really should have got a refund the first time.
"I was not proud to work for this company."
Aside from how the company handles returns and refunds, the terms and conditions of Kogan's standard warranty appear to fly in the face of the ACL – or at least the spirit of it – on a number of fronts.
It's all a question of whether the Ts and Cs lead readers to believe they take precedence over the ACL.
Kogan says they don't at the beginning of the document, but that's not mentioned again throughout the 18 (out of 20) clauses that follow, though "to the full extent permitted by law" accompanies some clauses.
In our view, a reader could easily be led to believe that Kogan's warranty terms will take precedence over the ACL.
Kogan's terms and conditions vs the Australian consumer law
Kogan vs the ACL
Online retailer Kogan seems to have its own ideas about Australian consumers' refund rights.
Kogan says: They'll refund a faulty product within the first 6 months only. (Products over $1000, excluding consumables.)
Australian consumer law says: Consumers can expect expensive items to last longer than 6 months and are entitled to a refund if they don't.
Kogan says: They'll send you a different "equivalent" product instead of repairing the one you bought.
Australian consumer law says: Replacements must be identical or customers can demand a refund.
Compensation for extra loss
Kogan says: They're not liable if one of their faulty products causes material loss beyond the product price.
Australian consumer law says: If a faulty TV catches fire and damages your property, for example, the consumer guarantees require that the damage be paid for.
Return delivery costs
Kogan says: They won't refund delivery costs in the case of a store credit or refund.
Australian consumer law says: Though not specifically referenced in the ACL, we don't think you should be out of pocket for delivery costs if you have to return faulty goods.
Kogan's director of logistics and customer care, Daniel Beahan, tells CHOICE that the company is a "customer service leader" with a "very high" customer loyalty rating.
"While CHOICE says they have received 22 complaints in the last two years, we would like to advise that we have sold over 5,500,000 products in the last two years and CHOICE has only provided details of one complaint," says Beahan.
"This means that 0.0004% of our purchases have resulted in a complaint to CHOICE in the last two years."
(For the record, we did contact Kogan about some of the earlier complaints.)
Product issues and returns process
Beahan says "it is important to note that as an online retailer, Kogan.com does not enjoy the benefit of a physical retail presence as bricks-and-mortar retailers do.
"So this does mean that customers are required on occasion to provide photo or video evidence via email in order for the Kogan.com team to triage their product issues and offer a resolution.
"Repair times do vary, but most repairs or assessments will be completed within seven days of a product being received at a repair centre, and often much sooner."
Beahan acknowledges that Kogan didn't always achieve its "typical four business hour response time" to customers during the peak 2018 shopping season toward the end of the year, when Kogan was "dispatching over 25,000 items per day".
He adds that "during most of the year, customer service enquiries are responded to within four business hours".
"The accusation that Kogan.com is using tactics that make the returns and repair process unduly difficult is not correct," Beahan says.