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Groupon Sued for 'Bait and Switch' Advertising

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By Cynthia Hsu, Esq. on August 29, 2011 6:46 AM

Online daily deals site Groupon has been sued over their advertising. A class action lawsuit alleges the site engages in illegal "bait-and-switch advertising" practices.

The plaintiff in the proposed class-action case is a San Francisco tour operator who accuses Groupon of purchasing tour-related keywords in Google's AdWords service, according to Ad Week.

This may seem like an innocent move, but the tour company says that when customers click on the links to Groupon there aren't any tour-related coupons available, reports Ad Week.

And, Groupon's purchases are driving up the cost of purchasing keywords for their tour company. It also pushes down their page placement in Google searches, Ad Week reports.

The company alleges that this is classic bait-and-switch advertising.

Bait-and-switch advertising is generally illegal in most states. It prohibits businesses from advertising an offer or product with no intention of honoring the offer or selling the product at that price.

Generally, all advertisements need to be genuine in the sense that it is a bona fide effort to sell the product at that price.

Why is bait-and-switch advertising illegal? It's likely meant to cut down on deceptive advertising products, and to prevent customers from getting lured in by false promises.

Groupon's actions could be considered bait-and-switch depending on what the advertisements say. For example, suppose they advertise a fantastic deal on a tour to San Francisco on Google. But, when customers click on this ad it instead takes them to the "deal of the day" which is actually a dozen donuts for $5.

Is this bait-and-switch advertising? It seems like it could be. And, business owners might fret - now that Groupon's been sued for advertising, could you be? It's possible. So, try to be prudent, and read up on legal advertising rules.

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