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Groupon Inc., an online provider of daily e-mails offering deals on everything from restaurants to dance lessons, was sued Tuesday by a Minnesota man who alleges the expiration dates on the company's discounts are deceptive and illegal.
The lawsuit filed in U.S. District Court in Minneapolis said federal and state laws prohibit companies from selling or issuing gift certificates with expiration dates.
The suit says Chicago-based Groupon and its retail partners issue their daily deals knowing many customers won't use them before they expire, and "many consumers are left with nothing, despite already having paid for the particular service or product."
"Accordingly, Groupon and its retail partners reap a substantial windfall from the sale of gift certificates that are not redeemed before expiration," the lawsuit said.
Groupon spokeswoman Julie Mossler said the company never comments on litigation.
After settling a lawsuit in Chicago last year, the company said in a blog post that when a Groupon gift certificate expires, customers can still redeem it for the amount they paid for it. For example, if a consumer pays $20 for a Groupon that offers $40 worth of food at a restaurant, the customer can still redeem the Groupon for $20 after it expires.
Under Groupon's terms of service, if a merchant refuses to redeem the voucher for its cash value, the company will either refund the money or give users a Groupon credit.
The lawsuit filed by Brian Zard of Richfield seeks class-action status. It asks for unspecified damages, including full refunds, and a court order preventing Groupon from issuing discounts with expiration dates. It estimates the amount of money at issue is more than $5 million.
Groupon started in 2008 and more than 50 million people signed up to receive its daily e-mails as of January, according to the company's website.
Groupon Inc.: http://www.groupon.com