LivingSocial Slammed for Cable 'Deal' That's No Deal

Another daily deal site is in trouble after posting a "deal" that doesn't actually offer a discount.

Industry watcher Daily Deal Media noticed that LivingSocial posted a deal late last month offering a VHS-to-DVD converter cable for $25 -- a discount, it says, of 64 percent. And while more than 1,500 users have taken advantage of the deal (which is still active) many others are pointing out that the "deal" doesn't actually save you a money. Daily Deal Media points to a discussion on Yelp where one reviewer calls the deal a "scam" and notes that the item can be found for significantly cheaper on various other sites.

"Scam" may be a bit harsh. If you buy this deal, your $25 gets you a voucher code that can be redeemed at electronics retailer Digital 007 for the product in question. That site is selling the cable for $70, so you are indeed getting the item for 64 percent off the Digital 007 price.

But Digital 007 is far from the only website selling this product, and that's where the "deal" falls short. A quick search on Google Shopping (GOOG) shows that it can be had for around $15 from numerous sellers, and Amazon sells it for just $10.50 -- less than half of LivingSocial's price.

This is a good reminder that, whether you're shopping through a discount retailer or a daily-deal site, you should take percentage-off discounts with a big grain of salt. The "sticker price" that's being used as the reference could be cherry-picked from another retailer who hasn't stayed competitive in pricing, or it could be based on an MSRP that no one is actually using anymore.

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The latter was true of a "deal" that Groupon (GRPN) held last year on refurbished Google's Nexus 7 tablets; while the $189 price was advertised as a 27 percent-off discount, Google had long since dropped that price to $199, meaning you were only saving $10 by buying a refurbished product through Groupon.

When you're evaluating a deal, it doesn't matter how much they're taking off the original price, or how much they're beating the price of some unnamed competitor. The only question that matters is whether the seller is currently beating the rest of the marketplace on price.

The good news is that it's easier than ever to answer that question. The hundreds of people who bought this deal could have saved themselves some money simply by copying the name of the product into Google and seeing all the retailers selling it for less. And Google is joined by numerous other price-comparison tools, including barcode-scanning apps and browser extensions that alert you when you're about to overspend. Next time you see a deal, we suggest consulting one of these services before you click "buy."

But if you made the mistake of buying this deal from LivingSocial, don't fret: The site lets you return unused vouchers within 7 days, so you can still get your money back.

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Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.