Groupon in Violation of Massachusetts Alcoholic Beverage Laws

Groupon has been dealing with a number of legal issues lately, including domain name battles with companies abroad and several class action suits claiming that Groupon violates gift certificate laws by adding expiration dates to its vouchers. Now it appears that Groupon may be heading for more legal problems, this time involving alcoholic beverage laws in the state of Massachusetts.

According to an article on BostonHerald.com, Massachusetts Alcoholic Beverages Control Commission claims that Groupon (and similar sites) are in violation of that state’s “Happy Hour” regulation which prohibits restaurants from discounting alcoholic beverages from the same price that would be charged during the same week or selling discounted drinks to anyone at a price less than what they would charge the general public.

Groupon has been asked by the commission to turn over a list of all the Massachusetts restaurants that it has done business with since its launch in 2008 where the deals have included discounted alcoholic drinks. This includes the volume of sales as well as revenues generated.

Apparently the legal issues came to light after the Cambridge Hyatt Regency requested an advisory opinion before moving ahead with a Groupon promotion that included alcoholic beverages. According to William Kelley, legal counsel for Massachusetts Alcoholic Beverages Control Commission, these promotions are illegal.

Obviously this development will have an impact on other group buying and daily deals sites doing business in Massachusetts but other states will also most likely be taking a closer look at their own laws to see if Groupon and other sites are in violation.

Just a few weeks ago we reported that the local government in Lawrence, Kansas was scrutinizing how retailers were handling the collection of sales tax on deals vouchers. Until just recently sites like Groupon, LivingSocial and others have been slipping under the radar where many legal issues are concerned but all that looks like it’s about to change. As states take a tighter rein on the industry, what kind of limitations will we see and will stricter regulations and possibly additional taxes make these deals seem less attractive? Are state and federal governments about to take the thrill out of the deal?

Source: BostonHerald.com