Groupon grows, sues itself

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GrouponIf imitation is the sincerest form of flattery, then the folks behind Groupon must be floating on air.

The coupon site has spawned dozens of knockoffs trying to capitalize on what is being called "social commerce," and birthed one of the oddest class action lawsuits ever with Groupon suing itself on behalf of unsatisfied customers.

For the uninitiated, Groupon offers one featured deal a day. Consumers can buy into the deal and once a specified number of people show interest, the deal is on. It takes the concept of buying in bulk to the masses.

Groupon began in Chicago in October 2008, and has since expanded to 40 cities. According to Groupon founder and CEO, Andrew Mason, the company will soon double in size, ending 2010 with 80 cities. Good news for deal seeking readers, to date nearly 2.3 million Groupon's have been sold.


Given Groupon's size and popularity, it's not surprising that so many similar sites have popped up. There's even a site where people can post and sell daily deals they can't use.

Mason cautions consumers to be wary. "A lot of these fast followers just see an opportunity, and want to copy or exploit it," he says. "They throw these things together, disappear after a couple of months and these customers are left out to dry."

Individual businesses however, have a vested interest in honoring their deals, even if the company that put the deal together is no longer around.

Then there are the lawyers. Chicago firm Edelson McGuire has filed a suit claiming Groupon violates a state consumer protection law and uses deceptive practices. The suit seeks class action status.

Mason was so insulted by the suit, he filed one against his own company on behalf of Groupon customers.

"If there is someone out there that feels we've systematically deceived them, we want to be be punished by that and give their money back as quickly as possible," he says. "I've always tried to err on the side of being transparent and honest. It horrifies me to think there are customers out that that think we did something wrong or deceptive."

Mason posted an impassioned statement on his blog and so far Groupon customers have leaped to his defense, trumpeting Groupon's customer service and ease of use.

In the past year, I've bought and redeemed Groupons for restaurants, entertainment and auto maintenance. The process is simple, redemption easy and the offers just keep getting better. I've passed on the sky diving, teeth whitening and tickets to watch a Cubs game from a nearby rooftop, but all offered tremendous value and the chance to experience something I would normally never do. Jumping out of a plane isn't going to happen for me, but if an offer for tennis or guitar lessons pops up I will be seriously tempted.

I only hope the legal distractions don't get in the way of Groupon's latest adventure: challenging someone to live off nothing but Groupons for one year and win $100,000. Mason says the applications are being reviewed and a winner will be announced shortly.
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