An investigation by the Competition and Markets Authority (CMA), launched in April, found that the discount site does not always provide customers with the refunds and other forms of redress, such as replacement items, they are legally entitled to.

In some cases, customers were only offered Groupon credits instead of refunds.

As well as potentially breaking consumer protection law, Groupon UK could be in breach of the formal commitments – known as ‘undertakings’ – that it gave to the CMA’s predecessor, the Office of Fair Trading (OFT), in 2012, the CMA 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, chief executive of the CMA, 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.”

Groupon has the opportunity to respond to the concerns outlined in the CMA’s letter and to avoid court action by signing further undertakings to address the CMA’s concerns. This may include redress for consumers denied a refund and additional compliance monitoring.