LivingSocial Settles Suit Over Expiration Dates
Daily deal site will pay $4.5 million and revise its policies
Thursday, October 25, 2012
Like its competitor Groupon, LivingSocial has agreed to settle a class action lawsuit that challenged the way the daily deals site interprets the expiration dates of its coupons. LivingSocial will pay $4.5 million, about half what Groupon paid to settle a similar suit earlier this year.
Both lawsuits -- and lots of consumer and merchant misunderstandings -- revolve around the expiration date issue. In LivingSocial's case, there are actually two expiration dates -- one for the “paid value” and another for the “promotional value.”
The "paid value" is what the consumer actually paid for the deal while the "promotional value" is the discount. So if you spend $20 for a LivingSocial voucher that gets you $50 worth of food at Papa Luigi's Trattoria, $20 is the paid value while $30 is the promotional value.
The promotional value expires faster than the paid value. In the just-settled lawsuit, the plaintiffs argued that the federal Credit Card Accountability and Responsibility Disclosure (CARD) Act and some state laws prohibit the vouchers from going bad for at least five years. LivingSocial disagreed that its deals fall under regulations governing gift certificates or credit cards.
Under the settlement, LivingSocial users who submit claims will be eligible for up to 100 percent of the paid value “of any LivingSocial deals that is unredeemed and unrefunded and whose promotional value has expired,” according to court documents. In other words, if your LivingSocial coupon lapsed, you might be able to get all or at least some of your money back.
Spell it out
To prevent future misunderstandings, LivingSocial’s terms and conditions will be changed “so that the expiration dates on its vouchers and website are more clear and understandable to consumers.” That includes more explicitly spelling out a deal’s paid and promotional value and their respective expiration dates, offering a refund for an unredeemed LivingSocial voucher within seven days of purchase, and setting the expiration date of the paid value of a deal to at least five years.
Confused? So is pretty much everyone else. After all, the entire daily deal segment is sort of the latest and most modern version of the three-card monte street hustle. Maybe you get something pretty good for not much money. Or maybe not.
Some of us who've gone to Trattorias on a Groupon or LivingSocial voucher may have been told we were getting a $50 dinner but it was pretty hard to find underneath all the lettuce and cheese.