Groupon's coupon expiration examined by Connecticut AG Jepsen

Groupon Inc.'s practice of selling group-discount coupons with expiration dates is being reviewed by Connecticut attorney general George Jepsen for possible state law violations.

"It appears that what Groupon Inc. sells or offers may fall within the definition of a gift certificate under Connecticut law," Jepsen said in a press statement issued yesterday. "Connecticut law prohibits gift certificates from being sold or issued subject to an expiration date."

Jepsen, in a July 12 letter, asked Groupon Chief Executive Officer Andrew Mason how his company's certificates are bought and redeemed, how many have been sold in state, which retailers have accepted them and the typical terms of those agreements.

The attorney general also asked about expiration dates. The Chicago-based company has until Aug. 5 to reply.

Groupon delivers daily discounts on hotels, restaurants and other goods and services to 83.1 million subscribers. The daily deal market pioneered by Groupon may generate $3.9bn in U.S. sales in 2015, from $873m in 2010, according to the research firm BIA/Kelsey in Chantilly, Virginia.

Julie Mossler, a spokeswoman for the company, didn't immediately reply to voice-mail and e-mail messages seeking comment. The company last month announced plans to raise $750m in an initial public offering.

Consumers have filed at least 12 federal court lawsuits challenging its business practices. Cases, including those originally brought in California, Massachusetts, Washington, Alabama and Illinois, have been consolidated for pre-trial proceedings before U.S. District judge Dana Sabraw in San Diego.

The multidistrict case is In re Groupon Inc. Marketing and Sales Practices Litigation, MDL 2238, U.S. District Court, Southern District of California (San Diego).

(Published by Bloomberg - July 15, 2011)