Discount voucher business Groupon could be taken to court if it fails to change its ways, according to the competition watchdog.
An investigation by the Competition and Markets Authority (CMA) launched in April found that the company does not always provide customers with the refunds or other forms of redress they are legally entitled to.
In some cases the CMA also found that Groupon UK would only offer credits, rather than cash refunds as required under consumer laws.
The company has now been contacted by the watchdog and told to commit to changes or face court action.
Investigators also found that some vouchers cannot always be redeemed within the advertised periods, or descriptions of goods and services were inaccurate or poor quality.
Bosses must also ensure customer services are up to scratch when customers contact them, the CMA added.
As well as potentially breaking consumer protection law, Groupon UK could be in breach of the formal commitments it gave to the CMA’s predecessor, the Office of Fair Trading (OFT), in 2012, it said.
As part of these commitments, Groupon UK pledged to ensure information on its website is not misleading and to comply with customers’ legal cancellation and refund rights.
Andrea Coscelli, CMA chief executive, said: “More people than ever are shopping online, especially over the last year.
“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.”