Groupon, Inc. (GRPN), the biggest seller of so-called daily deals, agreed to pay $8.5 million to settle a class action lawsuit alleging the expiration dates on its coupons are illegal. Customers who bought Groupon vouchers before December 1, 2011 can either redeem these past their expiration date or, if they are unable to do so, obtain a refund from the $8.5 million fund, according to the proposed settlement filed March 29, 2012 in federal court in San Diego. Residents in some states can seek refunds only for vouchers sold after August 22, 2010, according to the filing. Groupon also agreed for three years not to sell more than 10 percent of its daily deals with an expiration date of less than 30 days after their issue date.
The settlement arises out of 17 lawsuits against Groupon that were consolidated before U.S. District Judge Dana M. Sabraw in San Diego. The plaintiffs claimed Groupon and various retailers violate federal and state consumer protection laws with improper expiration dates and other provisions for the vouchers, such as the requirement that they be used in a single transaction. “Groupon effectively creates a sense of urgency among consumers to quickly purchase ‘groupon’ gift certificates by offering ‘daily deals’ for a short amount of time,” according to the first case filed last year. “Consumers therefore feel pressured and are rushed into buying the gift certificates and unwittingly become subject to the onerous sales conditions.”
The cases are entitled In re Groupon Inc. Marketing and Sales Practices Litigation, 11-MD-2238, U.S. District Court, Southern District of California (San Diego.)