5 Reasons Customers Are Turning Against Groupon
By Diane Bullock
NEW YORK ( Minyanville) -- Shame on me. I was fooled -- not once, not twice -- but three times by Groupon(GRPN) . Although I consider myself, by and large, a fairly savvy consumer, it turns out I had a steep learning curve when it came to realizing the extent to which I was being taken by the daily deal behemoth.
As it also turns out, I'm not alone in my buyer's remorse. Not by a long shot. Grumbles about Groupon are reverberating throughout the Web. There's even a dedicated Groupon griping Facebook page .
In the UK, the Advertising Standards Authority got involved and the Office of Fair Trading (or OFT) launched a formal investigation that recently found Groupon in "widespread" breach of consumer protection regulations. The company's Middle East arm has been so "flooded with complaints," it's changed leadership twice in less than six months.
Though the charges leveled against Groupon are numerous and varied, they usually fall into five basic categories.
1. False Advertising
Groupon has certainly achieved a level of trust among consumers, and for good reason. The site claims to have "hundreds of experts" in its employ who "painstakingly research" the businesses with which it partners.
So when a deal for Zaggora Weight-Loss HotPants is featured, customers are more likely to believe Groupon's claim that the "slimming technology...helps drop up to two dress sizes in two weeks" and not liken the product to some kind of "As Seen on TV" scam.
Likewise, Groupon members wouldn't expect that the photo used in the Noell Strahan Photography Studio & Salon deal for "Boudoir Photo Shoots" to be stolen from another photographer . And because of Groupon's alleged laborious vetting process, subscribers would tend to assume the photographer's website credits: "Voted #1 on THEKNOT.com & the BBB as the #1 CHOICE for WEDDINGS." Never mind that the Better Business Bureau doesn't rank wedding photographers or that Noell Strahan Photography Studio & Salon isn't even listed as an accredited business.
Misleading or outright dishonest marketing claims -- especially among health and beauty products -- has become so rampant that Groupon, in accordance with OFT regulations, must now support each one with "adequate substantiation."
2. Overselling Deals
A recurring theme among disgruntled Groupon customers is that the (often small) businesses can't keep up with high order demands. Since Groupon takes its cut upfront, it becomes the customer's problem when the vendor can't deliver in a timely manner -- or at all.
This issue lies at the heart of the Middle East Groupon crisis as customers have been forced to wait for over two months for their products. Groupon subscribers in the UK and Europe who purchased a Clouds Memory Foam mattress have it far worse. "Another Groupon scam!," writes a customer on the Groupon Complaints Facebook Page. "I paid for a Clouds Memory Foam mattress 6 months ago and still have not received it! Groupon will not refund my money, Clouds won't answer my emails or phone calls."