As Groupon grows in popularity, it’s generating custom for an increasing number of small local businesses – and also a growing number of complaints from their customers.
The UK’s Advertising Standards Authority (ASA) has upheld all seven of the complaints it has received about Groupon offers, judging Groupon has variously breached its rules on misleading advertising, substantiation, exaggeration, administration, pricing and qualification.
Most cases involve claims that discount offers were inflated compared with the normal price of a purchase, or that advertisers misleadingly required additional purchases in order to qualify for the offer.
In one case, a paintballing provider was accused of requiring customers buy more paintballs than provided under the offer and of failing to provide customers with promised lunch. In another, a restaurant was criticised because its claim of “Save 74%” was actually calculated against the most expensive item on its menu. Other advertisers were criticised for surrepticiously requiring additional full-price purchases to qualify for a discount on the first.
Groupon, led by CEO Andrew Mason, has also been rapped by the ASA because its German office is placing Google (NSDQ: GOOG) UK keyword ads for offers that don’t exist, like “70% off train tickets”, “All you can eat in London £3″ and “Bouquet of Flowers in London from £8″.
Although complaints about individual services usually pertain to the advertiser itself, it is Groupon, as distributor of these offers, which is the subject of the ASA complaints and which is forced to undertake the mundane labour of investigating the complaint with its advertising clients.
A line in one such ASA complaint adjudication reads: “(Groupon) said that it appeared that some customers had been incorrectly told by a member of Wonderfeets staff, who was no longer with the company, that the promotion could only be redeemed at another spa location. Wonderfeets response stated that they had had one or two staff issues which may have caused an unforeseen error.”
On such things are multi-million dollar IPOs built.
Considering the sheer number of offers Groupon sends each day, the ASA has received only very few complaints about it and has not instituted any penalties or sanctions, only warnings.
The ASA has declared: “The ads must not appear again in their current form. We told Groupon not to advertise sales promotions if they could not demonstrate they were genuine.”