Friday, June 10, 2011

Are Coupon Companies Like and Groupon Bad for Consumers and Businesses?

Food Glorious Food

Are coupon companies helping or hurting business?

My friend (who is still ranting about the situation in the background as I write this) purchased a $50 gift certificate for $25 from to the restaurant where we had already planned to have dinner with friends from out of state. We met our friends in the parking lot, entered the restaurant, to stare at a small sign posted that read:

As of June 1st we will no longer accept or honor gift certificates from

Keep in mind, this is June 10th and my friend purchased and printed the certificate minutes before we left for dinner. We asked to speak to the manager (who was not there) and we were told they were sorry but they had been trying to get to take them off their site for some time. The staff was friendly enough, but they did not appear overly concerned with our frustration over the matter.

If it had just been the two of us, we would have walked out, never to return. Our friends from out of state, really wanted to go there so we stayed. Dinner was fine, the service was good, but there were never more than three other tables filled at any point during our visit.

Our bill was $130 for six people. (I forgot to mention, the certificate stated that the check had to be a minimum of $100. This information was NOT on the site, either. You did not find this out until AFTER the certificate was purchased and printed.) We paid our bill, tipped our waitress 20% and left. We’ll never go back. Not because there was any problem with the food or the service, but because of the way they refused to do anything to make up for the inconvenience over the certificate, nor did they make us feel like our business was important.

All the way home I got to listen to my friend saying, “This is why I don’t shop on the Internet!” and “All these companies are a bunch of scams to take your money!” Immediately, stepping out of the car, he was on the phone with the credit card company to dispute the charge and file a complaint. The credit card company transferred him to where he had to sit on hold for 8 minutes, waiting to speak to a customer service rep. that of course, couldn’t do anything to help. A manager was called, who stated they would give credit, but no refund. 

The story was explained and the manager, Jonathan, said our problem was with the restaurant, not them… but they would give us a certificate to another restaurant but exchange only, no refund. My friend hung up, called the credit card company back and filed the dispute.

Needless to say, lost six customers in the span of three hours. My friend said, “I will NEVER buy another coupon or certificate online again!”

I started searching online and found pages and pages of complaints from consumers and business owners about bad experiences with This is a huge problem for consumers and businesses alike. I read several cases of people purchasing gift certificates, driving to the restaurants, only to find they had been closed for several months. (Keep in mind, these certificates supposedly never expire.) The only one benefiting is Why are they not responsible?

This afternoon I had just read Rocky Agrawal’s  article, Groupon Was “The Single Worst Decision I Have Made As A Business Owner”  and in it, Jesse’s Blog about how her café’s relationship with Groupon cost her business $10,000 in losses and created many aggravated customers.

If you are not familiar with how the coupon sites work, it goes something like this: A coupon or certificate is listed for say, “get $20 for $10”. You pay the coupon company $10 and the business that will provide the service gets, at most, $5 in return for providing you $20 of their food or product.

Depending on the business, this might be a beneficial arrangement, especially if it results in repeat customers. For many small businesses, if they are not extremely careful with their arrangement with the coupon company, it could force them to close.

Companies such as and Groupon need to be required to include all restrictions that might be associated with the coupons they are offering, up front, before the purchase, not afterward. They should also be required to return a customer’s money when the coupon is not honored by the business. (Especially if the business has closed.) The consumer is paying money to the coupon company, not the business.

Resulting refusals to honor coupons and certificates or hidden restrictions hurt all of us. They hurt the business, the consumer and potentially many other businesses when consumer trust is violated. Even if this only happens in a small percentage of the cases—how many negative experiences can your business really afford to endure? How many times will consumers (=YOU) pay for services they do not receive?

Through the power of social media and the Internet these ‘isolated’ incidents aren’t so isolated anymore.

Considering buying a coupon or certificate? I highly recommend calling the business before making the purchase to see it will be honored. I know I will.

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