Daily Deals Gone Wrong: 7 Stories

  • Deals That Really Are Too Good to Be True

    Daily deal sites have attracted millions of customers in just a few years and have changed the way many consumers shop for everything from restaurants to flights, but not everyone is a fan. MainStreet heard from dozens of daily deal users who purchased vouchers from popular sites like Groupon and LivingSocial that seemed like a great buy at first, but ended up being much less than they bargained for. In some cases, customers purchased deals for smaller establishments that were overwhelmed by the demand and fumbled in processing their requests. In other cases, customers complained that the value listed for items included with the voucher didn’t quite match up with what the venue actually charged. My one bad experience with daily deals is similar to the latter. I purchased a voucher on Travelzoo for a dinner for two at an upscale Italian restaurant in New York City. The voucher cost $55 – more than I usually spend on daily deals – but was said to have a “total value of up to $135.” It turned out the “up to” were the operative words. Much of that value came from a bottle of wine included with the deal that was supposed to be worth $40, but the bottle that actually came with it was Gato Negro, which typically costs somewhere between $4-$10 depending on whether you’re shopping at a wine cellar or a gas station. Unfortunately, we had little choice as to what we ordered and resigned ourselves to a not great meal and a not great deal. For their part, the daily deal sites recognize that things sometimes do go wrong and do their best to make up for it when they can. Groupon, for example, works hard to ensure the quality of its deals by running the offers through eight to 13 quality-control tests and even takes steps to independently value what a deal is worth, but in some cases, matters are out of their hands. “There are situations outside of our control, for example if a merchant goes out of business,” says Julie Mossler, spokesperson for Groupon. “If your experience redeeming a Groupon ever lets you down, we will return your purchase and go out of our way to make it right.” Likewise, LivingSocial tries to vet the businesses it partners with and respond to consumer complaints if and when they come. “We work very hard to make sure they provide a real value and a real deal, and we have actual sales people who go in and meet with the merchant to make sure they are doing that,” says Brendan Lewis, spokesman for LivingSocial. “If we get wind that things are being changed – it’s very rare – then we absolutely go back to the merchant and say we are getting a lot of complaints.” In these cases, the site might work to refund the customer who complained or even cancel the deal outright and refund everyone, depending on the situation. Here are stories from seven customers MainStreet spoke with who had less-than-pleasant experiences redeeming their vouchers, despite all the efforts that these and other sites have made to ensure this doesn’t happen. Photo Credit: Getty Images
    What Happened to My Relaxing Spa Experience?
  • What Happened to My Relaxing Spa Experience?

    Allison Jones from Florida had a great hair salon experience using a voucher she purchased on Groupon, which led her to go all out and purchase two more salon vouchers on the site the next week. Unfortunately, the second and third time didn’t quite match up. “The first massage and facial was not from the salon itself but from someone who rents a room, which was not mentioned on the Groupon,” she says.  “They sold 500 deals. Needless to say I haven't heard back and will be requesting a refund.” “The second voucher was for a pedicure at a ‘day spa,’” she recalls. “This place had just moved and was set up on folding tables. The pedicure chair was just a chair with an at-home foot massager. It was bad. The gel nails, which should last two weeks, lasted five days.” Photo Credit: Getty Images
    Voucher Redemption Fee
  • Voucher Redemption Fee

    In some cases, the way a business handles a voucher is largely beyond the control of the daily deal site that sold it in the first place. Steve from San Antonio, Texas, paid $10 for a $25 voucher on LivingSocial for a meal at a soul food restaurant in the area assuming it was a good deal. But when he saw the bill after eating there, he immediately felt swindled. The waiter upped the price of the soup, entrée and dessert he ordered by $1 to $2 each, and even went so far as to add a $7 “coupon redemption fee,” something unheard of for the major daily deal sites. “The net result is that they wanted to charge a total of $13 extra because I used the LivingSocial deal,” Steve told MainStreet. When he brought this up with the restaurant staff, they offered the sketchy explanation that these higher prices were based on a new menu that hadn’t been released just yet. “I pitched a fit and refused to pay anything more than what was on the menu. After much discussion, they finally relented and refigured the check by hand (using prices from the menu).” Even so, when Steve got home later, he realized that the restaurant had managed to overcharge him by $2. Photo Credit: Getty Images
    Overpriced Picture Frames
  • Overpriced Picture Frames

    Steve isn’t the only one to feel a little ripped off when redeeming a daily deal voucher. Olivia from New York says she paid $40 for a $100 voucher on BuyWithMe for framing and was surprised by what happened when she walked into the store and didn’t mention the voucher right away. “I went into the framer and didn’t give them the voucher at first, and they quoted me $40 to get a picture framed,” she told MainStreet. “Then I told them I had a discount and they quoted me $110 for the same frame… Apparently they have some sort of ‘discount’ when there’s no coupon present but the price became inflated with the deal.” If that’s not bad enough, Olivia says she’s been to plenty of framers elsewhere in New York City and knows that the $110 base price is significantly higher than average, but it was the business’s choice to toy with the prices that really left her feeling shortchanged. “Essentially the only reason they have the coupon is to get people in the door,” she says. “There’s no reason for purchasing the voucher, because you’re charged the same, if not less, without one.” Photo Credit: Getty Images
    The Case of the Missing Cupcakes
  • The Case of the Missing Cupcakes

    If there’s one thing we love at MainStreet besides good deals and smart spending, it’s cupcakes, which is probably why our Deputy Managing Editor Kali Geldis was so frustrated by one of her experiences on Groupon several months ago. “I saw a great deal on Groupon one day for cupcakes and purchased it on the spot since the company said it would deliver to my home in a New York borough,” she says. “A week later, I was trying to schedule a delivery time for the cupcakes and found that the phone number Groupon had given purchasers for the business had a full voicemail box and no one was actually answering my calls.” When this failed, Geldis tried reaching the company by email and succeeded in setting up a time to have the cupcakes delivered. “That time rolled by and no delivery, so I emailed again and set up another delivery time. Still no delivery. This happened at least twice before I saw on the business’s website that it had cancelled delivery to my borough and was only delivering to customers in Manhattan because the company couldn’t meet the extra demand from everyone using their Groupons. I emailed the contact again, and after two more missed delivery times, I finally got my cupcakes.” All of this taught Geldis a valuable lesson: “I now check the website of every business before I buy a Groupon to that establishment,” she says. “If the site looks shady or unorganized, it’s a red flag to me that I shouldn’t count on good customer service.” Photo Credit: Bloomberg News
    Not Good for Dinner
  • Not Good for Dinner

    It’s always important to read the fine print on a deal, but some shoppers have found that the fine print doesn’t always match up with the terms and conditions enforced by the venue. “I tried to use a coupon in a restaurant, only to be told it must be used at dinner (wasn't on the disclosure) and would only be good for a couple more days,” Ann Kaar wrote in response to a question on the MainStreet Facebook page. “When I asked to speak to the owner, he 'faked' or let's say embellished his accent... saying he didn't completely understand what he was getting into.” The experience has left Kaar wary of buying other daily deals. “Unless I know the establishement [sic], I'm not buying another Groupon deal,” she wrote. Photo Credit: Getty Images
    Can't Take a Meal to Go
  • Can't Take a Meal to Go

    Even deal enthusiasts can have a bad experience once in a while, as Staci Garcia from Florida found out recently. “I love deal sites and I use them all the time,” she told MainStreet. “However, just last week I got a group of friends together for a beer-tasting lesson and the location does not serve food. Knowing I was going to be there, I purchased a deal for $20 for $40 worth of food from the restaurant directly across the street from the beer location. I asked my friends what they wanted to eat and said I would go place the order and use my deal. But when I went to order, the girl at the hostess stand said that my deal was only good to dine-in.” Garcia tried to talk the restaurant into letting her take the food to go so since she had paid for the voucher and her friends were expecting food, but “they would not budge.” “I never would have gotten the deal had I known it was only good to dine-in because I knew I would be using it that upcoming Sunday at the beer-tasting event,” she says. “I walked back across the street with my deal paper and no food.” Photo Credit: Getty Images
    A Business Owner's Nightmare
  • A Business Owner's Nightmare

    Shoppers aren’t the only ones who have had bad experiences with daily deal sites. Studies have found that many businesses can benefit from sites like Groupon by using these as tools to market themselves and reach a new audience, yet some small-business owners are fearful of being overwhelmed by the demand and limited profit margins from these deals. Heidi Lamar counts herself in this latter group. Lamar runs the Spa Lamar in Arizona and for a while she rented out space in her spa to a woman who ran a yoga studio, but Lamar says that woman’s yoga business took a wrong turn once she signed up for a promotion on Groupon and sold roughly 500 vouchers. “After three months of Groupon [customers] overwhelming her, she approached me with the news that she was losing $3,000 per month, had emptied her savings and had to abandon her business,” Lamar recalls. “She offered to give it to me if I would keep her instructors employed.” As Lamar tells it, small boutique businesses like the yoga studio aren’t always a great fit for a massive daily deal campaign, which is why she hasn’t signed up her own spa company to take part in one of these deals. “We charge $50 for a pedicure. If we were to advertise on Groupon we would need to discount that to $25 and Groupon would keep half of that. That means that after paying for the nail tech and supplies and overhead I would lose about $20 for each one I sold,” she explains. “If I sold 500 of them (like the yoga owner I mentioned above did) I would lose $10,000.” “Then there is the basic staffing math,” she adds. “I have four pedi chairs and each pedi takes one hour so I can do 30 pedicures a day which means I would be booked for almost one month straight with nothing but money-losing services. This is what leads to buyer frustration. They call to book appointments and are told they can't get in for weeks.” Photo Credit: timetrax23
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