Conn. AG says Groupon 'responsive' to his concerns

Jessica M. Karmasek Apr. 24, 2012, 11:15am


HARTFORD, Conn. (Legal Newsline) - After raising concerns about the expiration of discount deals offered through Groupon Inc., Connecticut Attorney General George Jepsen said Monday that the company has improved its consumer disclosure information.

In July 2011, Jepsen wrote a letter to the chief executive of the Chicago-based coupon company, asking for more information about its business practices.

Specifically, the attorney general was concerned that the expiration dates imposed on some discount offers sold to Connecticut consumers may violate state law pertaining to gift certificates.

Connecticut law prohibits gift certificates from being sold or issued subject to an expiration date.

Jepsen also asked the company to explain the terms under which so-called "Groupons" are sold to and redeemed by consumers, how much revenue those sales generate in Connecticut, and how frequently expiration dates are imposed on the sale of services and goods at a discount.

Since then, Groupon has been the subject of private litigation across the country, including a class action lawsuit that the company is currently seeking court approval to settle.

Earlier this month, it was reported that the company reached a settlement in the litigation for $8.5 million.

The litigation consisted of 17 lawsuits that were consolidated in the U.S. District Court for the Southern District of California in San Diego before Judge Dana Sabraw.

The plaintiffs alleged that Groupon's gift certificates are sold and issued by the company with expiration dates that are deceptive and illegal and violate federal and state laws.

Connecticut is not a party in the class action suit.

"I am very pleased that my office was able to play an integral role in vastly improving the voucher form disclosures," Jepsen said in a statement Monday.

"Groupon has been very cooperative and responsive to the issues that we raised. As a result, American consumers will benefit from a clearer explanation of what they are getting for their money."

According to Jepsen's office, the company introduced revised vouchers late last week.

A statement advises purchasers that the sales value -- the amount they paid for vouchers -- may be used with the designated merchant at any time without expiration, even after the Groupon promotional value -- the bargain offered by the voucher -- expires.

For example, a consumer may pay $20 for a Groupon voucher entitling them to $40 worth of goods and services if purchased by a certain date. If the voucher has not been used by that date, the $40 promotional offer expires, but the purchasers may still redeem the voucher for $20 in goods or services from the issuing merchant.

The same terms apply to vouchers sold before the language was revised, Jepsen's office said.

"This issue will likely continue to play out in litigation across the country under the terms of various states' laws, and our legislature may wish, at some point, to revisit or clarify the intended scope of Connecticut's gift card statute," Jepsen said.

"Reasonable minds may differ about whether Connecticut's gift card law was intended to apply to these kinds of vouchers. But regardless of any legal uncertainty, consumers are entitled to a clear explanation of what they are getting when they purchase a Groupon voucher."

He continued, "Groupon's new voucher format does a far better job of providing that information than the format in use when we began talking with the company."

From Legal Newsline: Reach Jessica Karmasek by email at

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