Are Expiration Dates On Groupon Deals Illegal?

Andrew Mason, CEO, Groupon

Groupon founder Andrew Mason was already sick of it a year ago, shortly after his fast-growing company first got sued over allegedly illegal expiration dates for their daily deals. “The confounding thing about this experience is that we give everyone refunds if they have any issues with their Groupon experience-we don’t need to get sued for it,” wrote Mason on the company’s blog. But Mason’s pleas didn’t help. Even though the company made changes to the site-and emphasized that the non-promotional value of Groupons lasts a full five years-it continues to get pounded with allegations that the fast-expiring Groupon deals are a violation of state and federal laws.

As I noted last week, Groupon was sued eight times in all of 2010-but in 2011, that pace has increased. It’s been sued in federal court 12 times this year. After going through the complaints, it turns out nine of those lawsuits are all about expiration dates. In fact, the lawsuits are so similar, it looks as if some of the lawyers working in this space are actually copying each other’s complaints, word for word.

The promotional value of a Groupon expires at a certain time, often within a few months. But the value that you paid for the Groupon is good for a much longer period of time, which varies by state. Groupon didn’t respond to a request for comment about these lawsuits, but a Groupon rep responded to this issue on the Consumerist blog in January, describing the situation like this: “Law doesn’t really specify if Groupon is a gift card or a coupon. Gift card law is more stringent, so that’s what we adhere to. A Groupon is good until its expiration date; at that time, the merchant will still have to honor what you PAID (NOT face value), for five years or in accordance with state law. It’s five years in Illinois, and that’s the most strict in the country, so that’s what we ask merchants to abide by.”

But the new lawsuits say that Groupons aren’t gift cards or coupons at all, they’re more like gift certificates-and the suits state that Groupon is in violation of state and federal laws that say gift certificates shouldn’t expire at all.

What do these suits indicate? First and most obviously, there’s a large and active bar of consumer-rights attorneys eager to jump on a claim against a fast-growing company like Groupon. The other thing is that so far, Groupon’s strategy of using a liberal stance on consumer refunds in the hopes of deterring lawsuits hasn’t paid off-at all.

Here are the lawsuits filed against Groupon over expiration dates in 2011. Note these only include cases filed in federal court. All are class actions, and all the suits allege violations of the Credit Card Accountability Responsibility Disclosure (CARD) Act; they also allege violations of various state laws. Six of the nine lawsuits include several pages of identical or almost-identical text, even though they’re filed by three different law firms. To read the apparently copied language, check out the section titled “Factual Allegations,” usually on the forth or fifth page. (The Christensen, Johnson, and Vasquez complaints are also nearly identical, but are all filed by the same firm.)

»  Ferreira v. Groupon [PDF], Southern District of California, filed Jan. 21, 2011 by Robbins Geller Rudman & Dowd, a San Diego law firm.

»  Cohen v. Groupon [PDF], filed on 2/4/11 by Wites & Kapetan in Florida.

»  Christensen v. Groupon [PDF], filed on 2/28/11 by a group of lawyers from six different firms.

»  Johnson v. Groupon [PDF], filed on 3/1/11 in Illinois by the same group that filed the Christensen and Vasquez complaints.

»  Eidenmuller v. Groupon [PDF], filed on 3/2/11 in Northern California by Bonnett, Fairbourn, Friedman & Balint.

»  Gosling v. Groupon [PDF], filed on 3/4/11 in Northern California by the same law firm that filed the Ferreira complaint.

»  Zard v. Groupon [PDF], filed 3/8/11 in Minnesota by the same law firm that filed the Eidenmuller complaint.

»  Vasquez v. Groupon [PDF], filed 3/8/11 in Washington D.C. by most of the same firms that filed the Johnson and Christensen complaints.

»  Kimel v. Groupon [PDF], filed 3/9/11 in Ohio by the same law firm that filed the Ferreira and Gosling complaints.


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