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A federal class action lawsuit claims social coupon site Groupon and its partners promote, sell and issue gift certificates with illegal expiration dates.
The Groupon class action lawsuit claims Groupon violates the Credit Card Accountability Responsibility and Disclosure Act, which requires that gift certificates not expire for 5 years, by selling gift certificates with extremely short expiration dates. Groupon expiration dates are frequently just a few months from the date of purchase. This is done purposefully, the class action claims, because Groupon and the merchants it partners with know that many consumers ultimately will be unable to redeem the gift certificates before they expire, which means more money in their pocket.
“Groupon’s business model, particularly its ability to establish partnerships with retail businesses, depends in large part on its systematic use of illegal expiration dates,” the Groupon class action lawsuit says. Groupon reportedly made half a billion dollars in gift certificate sales in 2010 alone.
“In addition to imposing illegal expiration periods, defendants impose other deceptive and unfair conditions on consumers,” the class action continues, including requiring consumers to redeem gift certificates in the course of a single transaction. This forces consumers to redeem their gift certificates all at once or lose its full value.
Close to 40 million people worldwide have reportedly signed up to receive offers from Groupon.
Groupon famously responded to a class action lawsuit filed against it a year ago over the same alleged illegal practices by filing its own class action lawsuit – against itself. Groupon invited all customers who felt they were let down by its expiration date policies to join its suit. The original class action lawsuit, filed by law firm Edelson McGuire, was dismissed several months later with Groupon settling with the named plaintiff.
Groupon competitor LivingSocial.com was hit with its own class action lawsuit over illegal expiration dates last month. (Read about the LivingSocial class action lawsuit here.)
The 2011 Groupon class action lawsuit is brought on behalf of all U.S. consumers who purchased or acquired a gift certificate from Groupon with an expiration date of less than five years from the date of purchase. It also seeks to represent a subclass of class members in the District of Columbia who purchased or acquired a Groupon certificate with any expiration date. It is asking that Groupon be enjoined from issuing gift certificates with short expiration dates and damages for class members.
A copy of the Groupon Class Action Lawsuit can be read here.
Updated March 10th, 2011
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3 thoughts onGroupon Hit With Second Class Action Lawsuit
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We don’t want you to feel pressured here at Groupon. We can, however, offer you a free Taco Bell Groupon (with $90 purchase) if you act in the next 10 minutes.
*1 coupon redemption allowed per person, per dog/cat, per second, per participating restaurant of Taco Bell corporation worldwide.*
Can one still get in on the groupon case if I didn’t submit earlier?