Can You Put an Expiration Date …

May 31, 2011 – on a pre-paid voucher for goods and services? For now, we think it is not advisable…

Numerous lawsuits against Groupon raise the question of the applicability of state and federal gift certificate/gift card laws to non-traditional gift certificates/cards, such as pre-paid vouchers like Groupon vouchers.

There are at least 9 cases pending against Groupon, and the key issue is whether the Groupon voucher is a gift certificate/gift card – which might vary by state/federal statutory definition. If the Groupon voucher is determined to be a gift certificate/gift card, then Groupon may be in violation of the applicable law’s prohibition or restriction on expiration dates.

Interestingly, these lawsuits are being filed even though Groupon has a policy that once the Groupon voucher expires, the retailer must honor the Groupon voucher for the value paid, as required by applicable law (for instance, Illinois law prohibits expiration of gift certificates for 5 years). For example, on June 1, 2011 you bought a Groupon voucher for $5.00 that gives admission to an Illinois museum anytime until August 31, 2011. The normal museum admission fee is $15. If you go to the museum after August 31, 2011, but before June 1, 2016, the museum could deny your entry to the museum with the voucher, but under the Groupon policy, the museum should deduct $5 from the regular admission fee (thus you tender your Groupon certificate plus $10 to gain entry to the museum). Essentially, the Groupon policy is meant to permit the “bargain” to expire, but ensure that you do not lose the original amount you paid. If the establishment refuses to honor the purchase price, Groupon’s current policy is that it will refund the purchase price to you directly.

In addition, Groupon currently has a customer-friendly refund policy that states that Groupon will refund your purchase price if you are unsatisfied with your Groupon experience for any reason.

And yet, in the face of all these Groupon policies, the lawsuits continue.

In light of the lack of clarity on the applicability of many of the gift certificate/gift card laws to pre-paid vouchers, until case law or statutory updates clarifiy the definition of gift certificates or gift cards, we advise against using expiration dates that would violate the applicable laws for gift certificates and gift cards.