Online deal peddler Groupon settled a class action lawsuit this week and has agreed to pay $8.5 million into a settlement fund. The settlement covers 17 Groupon lawsuits that had previously been consolidated in a federal court in San Diego.
Though plaintiffs accuse the company of pressuring consumers and imposing "onerous sales conditions," they are mostly upset with Groupon's short expiration dates. They say those dates violate state and federal gift card and gift certificate laws.
It is these laws that have likely caused most of Groupon's legal problems. The company does business nationwide, but appears to have ignored the accompanying variation in law.
For one, plaintiffs in the Groupon lawsuit claim the short expiration dates -- which sometimes land only 30 days after purchase -- violate the Credit Card Accountability Responsibility and Disclosure Act of 2009. In addition to reforming credit card rules, this law prohibits the sale of gift cards that expire in fewer than five years.
Even if this law does not apply, state laws do. California, for example, does not permit the sale of gift cards and gift certificates that expire. Illinois' law mimics the federal law, reports the Chicago Sun-Times, and prohibits the sale of gift certificates that expire in less than five years.
Coupons are included under this rule.
If Groupon had done its state-by-state due diligence, chances are it wouldn't have been bombarded with so many complaints. So let the Groupon lawsuit stand as a reminder. You must consider consumer protection laws in every state in which your company does business.
- Groupon to Settle Class-Action Lawsuit for $8.5 Million (Bloomberg)
- Groupon Sued Again Over Expiration Dates (FindLaw's Injured)
- Groupon Sued for 'Bait and Switch' Advertising (FindLaw's Free Enterprise)