Earlier this month we ran an article on our sister website, SayCampusLife.com, titled: “How to Make the Most of Groupon.” We received some comments including one from Carl R. who said, “I see Groupon more along the lines of a Bernie Madoff Ponzi scheme then a business model.” Apparently, Carl found some problems with the way Groupon conducts its business, something we’ve since learned have expressed similar concerns.
We don’t have a stake in the game — Groupon isn’t an advertiser and this writer has never used the service. Still, we’ve enjoyed looking at many of the daily offerings in our email inbox and have wondered whether to pursue a few of the discounts. Not yet, maybe later.
Since we ran our initial article, we’ve decided to do some research to find out what people are saying about Groupon. After all, if this model is so successful, it likely will be replicated many times over. Or at least Groupon will become so big that its daily deals will be the talk of water cooler or at least elicit some tweets on Twitter.
Bait & Switch?
Michael Arrington of Tech Crunch weighed in on Groupon last month writing, “Valentines Day Bait & Switch: Groupon Must Avoid Becoming Just Another Useless Coupon Site,” noting that the couponing service may have already lost its way. Arrington noted a practice among some retailers where he alleges they raise prices first before offering discounts from 50 percent on up. If true, consumers aren’t saving as much and retailers aren’t losing as much. Groupon is still making out as they get half of whatever the retailer pulls in.
Groupon is also running into problems with some of its restaurant deals, especially those where alcohol is part of the meal plan. Just this week, Forbes reported that some states, such as California, require Groupon to be licensed in its state before making offers. New York doesn’t allow alcohol to be discounted more than 50 percent, but the Forbes article indicates that Groupon has been following that requirement.
In March 2010, the lawfirm Edelson McGuire filed a class-action lawsuit against Groupon for “…violating gift certificate laws by including expiration dates on the discounts,” as reported by the Chicago Tribune. Groupon responded by saying that they would fight fire with fire, but not by attacking litigants. Instead, the company sought to find out which of its customers felt that they were ripped off, offering them refunds. Indeed, the company created its own “class action” against itself, but quickly settled everything the following month.
One thing we have learned as we done our research is that there seems to be a lot of petty or unsubstantiated attacks made against Groupon. Some may come from its competitors and others by people who feel that they have been genuinely ripped off. However, by reviewing the company’s FAQs, it is clear that getting your money back is possible if there is a problem or if you’re not satisfied with the service. If there is still a problem, a report filed with the Better Business Bureau and your state’s Office of the Attorney General should suffice.
Finally, to answer our own question all we can say is this: compare your Groupon offer with whatever deal you can arrange with a retailer yourself. Whichever deal is best, then use it — you may be able to strike up a direct bargain with a retailer who is willing to negotiate with you.