Groupon has been the subject of 17 separate lawsuits that were combined in a federal court in San Diego accusing the company of offering coupons with illegal expiration dates. The suit alleged that Groupon and the retailers it works with were violating federal and state consumer protection laws. Groupon has now agreed to settle the combined lawsuits.
The settlement Groupon is offering totals $8.5 million and despite the settlement, the company still denies the allegations in the suit. The settlement notification and revised earnings sent shares in Groupon down $3.10 per share at closing. The key allegation in the suit was that the expiration dates on the coupons violated laws such as the federal Credit Card Accountability Responsibility and Disclosure Act.
The law stipulates that gift cards expiring in fewer than five years can't be sold. Groupon also revised its Q4 financial results Friday stating that it had a "material witness" in its internal controls after it fell to set aside enough money for consumer refunds. Groupon offers vouchers for special daily deals generally expiring within 24 hours creating a sense of urgency for buyers. This settlement covers customers who received Groupon vouchers between November 2008 and December 1, 2011. The customers may redeem vouchers passed their expiration dates or recover their money from the $8.5 million settlement fund.