Gift certificate website accused of cheating customers



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Posted on February 15, 2011 at 7:29 PM

SEATTLE – A popular service that offers online gift certificates has been hit with a class-action lawsuit in Seattle.

Living Social is accused of violating the Washington Consumer Protection Act, which makes it illegal to include expiration dates on pre-paid gift certificates. The Maryland-based company prints an expiration date on the gift vouchers it gives to customers.

The suit was filed Monday in U.S. District Court in Seattle.

"They're cheating the people that buy these things," says Jay Carlson, an attorney representing the two women in the lawsuit. "Living Social is selling certificates in a way that really reduces the opportunity to get the value of the certificate."

The company says in its terms and conditions section that the expiration date is exempt if it is prohibited under the law of the state that the gift voucher is in. But Carlson says customers are not encouraged to read the fine print.

"They bury those details in the terms of use. It's deceiving," Carlson said.

Many business owners say some customers don't receive the services they are promised because they didn't redeem it before the printed expiration date.

"In that case, we offer them a refund in the form of a gift card," said Inez Gray, owner of Habitude Salon and Spa in Ballard.

Despite that, Gray said she wouldn't use Living Social without those expiration dates.

"It would be a deal breaker for me," she said. "I don't want to do half price facials and massages three years from now when I don't need new
business anymore."

Attorneys who filed the lawsuit are convinced there are tens of thousands of customers out there that deserve a refund on services they didn't receive

Living Social says it is currently reviewing the particulars of this suit.

"We never received any communication from the plaintiffs that they were in any way unhappy with their purchases. We would have done everything in our power to please them," a company spokesperson wrote in an e-mail.

Disclosure: The parent company of KING 5 recently launched a similar site called Yollar.  It also has expiration dates, although neither Yollar nor the more popular Groupon was named in this lawsuit.