Groupon Inc, which runs the world's largest online coupon site, has agreed to an $8.5 million settlement of litigation alleging expiration dates on its coupons are illegal.
The settlement resolves 17 lawsuits consolidated in a federal court in San Diego, where settlement papers were filed on March 29.
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It addresses claims that the restrictions imposed on consumers by the Chicago-based company and various retailers it works with violated federal and state consumer protection laws.
The plaintiffs contended Groupon "effectively creates a sense of urgency" among consumers to buy gift certificates by offering "daily deals" for a short amount of time, usually 24 hours.
"Consumers therefore feel pressured and are rushed into buying the gift certificates and unwittingly become subject to the onerous sales conditions imposed," including that gift certificates be used in a single transaction and that cash refunds for unused portions are not allowed, court papers show.
Groupon spokeswoman Julie Mossler said the company does not discuss pending litigation.
The settlement was reached one day before Groupon unexpectedly revised its fourth-quarter results and said it had a "material weakness" in its internal controls after failing to set aside enough money for customer refunds.
Its shares were down $2.78, or 15.1 percent, at $15.60 in late afternoon trading on the Nasdaq.