Daily deal leader Groupon has agreed to pay $8.5 million to settle claims that it violated federal and state consumer protection laws. More specifically, the Groupon settlement, if accepted by U.S. District Judge Dana Sabraw, will end a class action lawsuit involving possibly illegal expiration dates on Groupon vouchers.
In addition to state laws that regulate gift card and gift certificate expiration dates, the federal Credit Card Accountability Responsibility and Disclosure Act prohibits the sale of gift cards that expire in less than five years from the sale date. Many Groupon vouchers expire within 30 days of purchase.
Though Groupon has a policy of refunding a gift certificate's purchase price after the date of expiration, consumers lose the certificate's promotional value. The individuals who filed the lawsuit say this practice violates federal law. Though Groupon has agreed to the settlement, Bloomberg reports that it adamantly disagrees with this argument.
Under the Groupon settlement, individuals who purchased deals between November 2008 and December 1, 2011 will be able to redeem their coupons past the expiration date. If unable to do so, the Chicago Sun-Times reports that he or she can request a refund from the $8.5 million.
In some states, this clause applies to only those deals sold after August 22, 2010.
In addition to offering promotional value refunds, the Groupon settlement will also change the way the company chooses expiration dates. It has promised not to sell more than 10% of its deals with an expiration date less than 30 days later.