For the past several months LivingSocial has been announcing to the world that it was going to overtake Groupon for the number one spot in the daily deals industry and what was once called a distance second must now be referred to as gaining. The Washington, D.C.- based daily deals purveyor, currently sitting in the number two spot, has made some impressive moves, with their $175 million funding from Amazon, an Amazon gift card deal that beat out Groupon’s record Gap deal and a Super Bowl ad that at least didn’t reach the level of suck that Groupon’s controversial ads did.
Of course with success comes the same problems and litany of complaints that the bigger players face and in this case, just like Groupon, LivingSocial has been hit with a law suit claiming that they are violating consumer protection laws by including expiration dates on their “certificates” aka vouchers and that the site is cheating customers out of leftover funds.
The problem comes with the wording and interpretation of the law. Neither Groupon nor LivingSocial call their vouchers gift certificates, and despite the fact that reporters, journalists and even plaintiffs’ attorneys repeatedly call them gift certificates, doesn’t make it so in terms of the law (yet). Even in the case of LivingSocial’s Amazon gift certificate, it could be argued that the site was selling vouchers toward Amazon gift certificates and not the actual gift certificate which would then be the responsibility of Amazon.
What does seen to be confusing for many is that, at least in Groupon’s case, they state that gift certificate laws apply, but to their vouchers, not gift certificates. This is obviously an attempt on their part to make sure they are covered legally, but in reality it only serves to confuse.
According to Ad Law Access a Washington, D.C.-based advertising law information site:
Approximately half the states have laws that either restrict or prohibit expiration dates. In addition, a recent federal law requires gift certificates to be valid for at least 5 years. The plaintiffs in these cases are arguing that the Groupon and LivingSocial deals constitute gift certificates and that the expiration on the deals violate federal and state laws. In addition, the plaintiffs in the LivingSocial lawsuit are arguing that the no cash back provision on the company’s deals violates a Washington law that requires issuers to give cash back, under certain circumstances.
These lawsuits demonstrate that plaintiff’s lawyers are attempting to stretch gift certificate laws to cover various types of offers that don’t fit the traditional mold of gift certificates.
The gift certificate laws as they apply to Groupon, LivingSocial or any other daily deals or group buying site is unclear and will require a court of law to determine exactly where the term “voucher” fits in. In the meantime it does seem like these sites that claim that customer satisfaction is their number one priority, would try to clarify some of these issues in something other than the confusing legalese they are currently using.