San Diego, CA: Groupon Inc, the popular Internet-based seller of daily deal coupons, has agreed to pay $8.5 million to settle a consumer fraud class action lawsuit. The lawsuit, filed by disgruntleld customers, alleges that the expiration dates on the coupons are illegal.
The proposed settlement applies to anyone who purchased Groupon vouchers before December 1, 2011. Under the terms of the settlement, the class members can either redeem the coupons beyond their expiration date or, if they are unable to do so, obtain a refund from the $8.5 million fund. Residents in some states can seek refunds only for vouchers sold after Aug. 22, 2010.
And, for the next three years, also as part of the settlement, Groupon has agreed not to sell more than 10 percent of its daily deals with an expiration date of less than 30 days after their issue date.
According to Bloomberg.com, the settlement pertains to 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 lawsuit which was filed in 2011. "Consumers therefore feel pressured and are rushed into buying the gift certificates and unwittingly become subject to the onerous sales conditions."