Complaints surge over group coupon deals

August 3, 2011

Deal hunters are consuming deep discounts on everything from restaurant meals to boat tours, but they are also starting to complain about troubles with these offers in increasing numbers.

Both the Consumer Federation of America and Web watchdog have noted the surge in this relatively new genre of deal offerings. Consumers get lost in the marketing gimmick of the daily deal and don’t see what’s actually involved, including short expiration dates or requirements for additional purchases.

That trouble with the small print is the biggest problem consumer agencies also have seen with the coupons. “Marketers online are becoming increasingly misleading and aggressive in the way they sell products and services,” says Jeremy Gin, co-founder of, a community of consumers who evaluate web offerings. “As a result, it is now more than ever incumbent on consumers to do their research on online businesses — read reviews and read the fine print — before they buy.”

Gin says that Groupon had earned a three out of five rating on his site, and had more than 100 people warning against it, while LivingSocial rated two out of three and had 100 warnings; both sites were listed as “not recommended.” He notes many users also report snagging great deals without any issue.

“The major trend in consumer complaints we see on SiteJabber surrounds sites that market their services as one thing, but in the fine print they are something less desirable,” Gin adds. “This serves to increase sales in the short term at the cost of customer satisfaction and long-term brand loyalty. These types of sites are not so bold as scam artists who merely steal money and never return emails. But instead these sites often respond to complaints by pointing to the terms of service and essentially saying, ‘Sorry you agreed to it. No refunds’.”

Susan Grant, the consumer protection director at the Consumer Federation, only sees this trend growing. “I am not surprised that agencies have begun to get complaints about group coupons and would expect that to continue,” she says.  “Any time you have a new form of discount opportunity you’ll have problems with the terms not being clear.”

When Grant was working on the Consumer Federation’s recently-released list of Top 10 consumer complaints, another category that was growing was about the “recovery” scam, which this year targeted consumers trying to dump their unwanted timeshares. The Top 10 list was distilled from 252,000 complaints gathered from consumer agencies in 18 states by the federation, the National Association of Consumer Agency Administrators and the North American Consumer Protection Investigators.

As long as the economy is struggling, Grant says, it’s likely that this sort of fraud will continue.

“I would make an educated guess that we’ll see other types of ‘recovery services’ aimed at people who have been ripped off in various scams, not just timeshare resales,” she says. “Fraud was not in the top 10 before, and I think that in hard times people are even more susceptible to offers of money.”

Despite the upward trend, neither deal coupons did not make the top 10. Instead, the data showed that consumers continue to complain most about what they always have: problems related to dealing with their cars, their debt, their homes and their shopping experiences. The list also called out that consumers had great concern about data breaches and that they were still falling for classic old scams, such as the grandparent scam — in which a fraud calls a senior pretending to be their grandchild in need of money, typically to make bail while on some concocted adventure.

Here are the top 10 complaints for 2010 from the report by the federation:

1. Auto: Misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, leasing and towing disputes

2. Credit/Debt: Billing and fee disputes, mortgage-related fraud, credit repair, debt relief services, predatory lending, illegal or abusive debt collection tactics

3. (tie) Home improvement/construction:  Shoddy work, failure to start or complete the job

Retail sales: False advertising and other deceptive practices, defective merchandise, problems with rebates, coupons, gift cards and gift certificates, failure to deliver

4. Utilities: Service problems or billing disputes with phone, cable, satellite, Internet, electric and gas service

5. Services: Misrepresentations, shoddy work, failure to have required licenses, failure to perform

6. Internet sales: Misrepresentations or other deceptive practice, failure to deliver online purchases

7. Household goods:  misrepresentations, failure to deliver, faulty repairs in connection with furniture or appliances

8. Landlord/tenant:  Unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, illegal eviction tactics

9. Fraud: Bogus sweepstakes and lotteries, work-at-home schemes, and other scams

10. Home solicitations: Misrepresentations or failure to deliver in door-to-door, telemarketing or mail solicitations, do-not-call violations.


One comment

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[…] Complaints surge over group coupon deals […]

Posted by Reuters | Lowcountry Massage | Report as abusive

I don’t blame deal sites in exaggerating a bit on their deals in order to increase sales. It is advertising. Sad thing about it is misrepresentations happen, resulting in failures of service and bad testimonials for the merchant.

Posted by vouchersin | Report as abusive