The Australian Competition and Consumer Commission has taken online retailer Kogan to the Federal Court, alleging that the company indulged in misleading advertising about a 10% discount promotion in breach of Australian Consumer Law.

In a statement on Thursday, the ACCC said Kogan had run an online promotion between 27 and 30 June last year in which a 10% discount was offered on most products using the discount code "TAXTIME." The promotion was also sent to consumers by email and SMS.

The competition watchdog said it alleged that these advertisement were false or misleading as the company had upped the prices of more than 600 products just before the promotion, with most prices being marked up by at least 10%.

“We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual prices. In fact, Kogan had inflated product prices which we say created a false impression of the effective discount,” ACCC commissioner Sarah Court said.

As 30 June approached, the ACCC said Kogan’s email advertisements used statements such as “48 hours left!” and “Ends midnight tonight!” which it alleged gave the impression that consumers only had a limited time to purchase these products at the “discounted” prices.

Soon after the promotion period ended, Kogan lowered prices of products offered as part of the promotion, many back to their pre-promotion prices.

“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings,” Court said.

The ACCC has sought penalties, injunctions, declarations, corrective notices and costs from Kogan.

In a statement to the ASX, Kogan denied the allegations and said it would defend the charge in court.