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Groupon Lawsuit Exposes Risk In Pre-Paid Offers

A class action lawsuit brought against Groupon and Nordstrom illustrates the risks in offering pre-paid discounts for a limited period of time.

A class action lawsuit brought against Groupon and Nordstrom illustrates the risks in offering pre-paid discounts for a limited period of time. The case Ferreira v. Groupon, Inc., brought in federal court in California, challenges Groupon's sale of coupons for discounts at a pre-paid price containing short expiration dates. The plaintiff in this case argues that Groupon's deals constitute gift certificates and that the short expiration dates violate California and federal laws governing the sale of gift certificates. The case is noteworthy because Groupon permits consumers to utilize the funds expended to purchase the discount in a manner consistent with gift certificates (i.e., five-year expiration dating) even though the discount aspect may only be available for a limited time.

The Mobile Marketer article "Does Groupon lawsuit threaten all mobile coupon apps" features analysis by Andrew Lustigman on the expiration dating issue.

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